Statement of Cash Flows

Flashcards covering key concepts related to the statement of cash flows.

Cash Flow Activities

Divided into operating, investing, and financing activities.

Operating Activities

Cash receipts and payments for transactions related to revenue and expense activities.

Investing Activities

Cash transactions involving the purchase and sale of long-term assets and current investments.

Financing Activities

Inflows and outflows of cash resulting from external financing of a business.

Net Income

Total revenue minus total expenses.

Depreciation Expense

A non-cash charge that reduces the value of an asset over time.

Operating Cash Flows

Net cash flows from operating activities, calculated by reconciling net income.

Noncash Activities

Significant investing and financing activities that do not affect cash.

Direct Method

Method of reporting operating activities that lists cash inflows and outflows directly.

Indirect Method

Method of reporting operating activities that starts with net income and adjusts for changes.

Adjustments to Net Income

Includes noncash items and changes in current assets and liabilities.

Loss on Sale of Land

An expense that reduces net income, which is added back in operating cash flows.

Accounts Receivable

Money owed to a company by its customers for sales made on credit.

Accounts Payable

Money a company owes its suppliers for goods or services received.

Cash Flows from Operating Activities

Cash flows generated from core business operations.

Cash Flows from Investing Activities

Cash flows resulting from the purchase and sale of physical and financial investments.

Cash Flows from Financing Activities

Cash flows resulting from transactions with the company's owners and creditors.

Dividends Paid

Cash distributions made to shareholders, classified as financing activities.

Dividends Received

Cash received from investments in other companies, classified as operating activities.