3.1 Cash Flow and Financial Statements: A Closer Look

The only meaningful yardstick for evaluating business decisions is whether they create ___________

economic value

a firm's activities that generate cash

sources of cash

a firm's activities in which cash is spent

uses of cash

uses of cash is also called _______

applications of cash

An increase in an asset account means the firm bought some assets -- a _______

use of cash

If an asset account went down, then on a net basis, the firm sold some of its assets -- a _______

source of cash

If a liability account went down, then the firm has made a net payment -- a ______

use of cash

An increase in a left-side (asset) account or a decrease in a right side (liability) account is a ___________

use of cash

A decrease in an asset account or an increase in a liability account is a _____

source of cash

The ________ to cash is just the difference between sources and uses

net addition

a firm's financial statement that summarizes its sources and uses of cash over a specified period of time

statement of cash flows

3 categories of activities

operating, financing, investment

3 potential sources of cash: _______, increase in _______, increase in ________

operations (net income), accounts payable, common stock

4 uses of cash: increase in ______, increase in ________, decrease in ________, decrease in ______

accounts receivable, inventory, notes payable, long-term debt

POWERPOINT: Cash flows are generated by

1) selling a _____

2) selling an _____

3) selling _____ (issues ___ and _____)

product, asset, securities, bonds, stocks

POWERPOINT: Cash flows are spent on:

1) _____, _____, and _____

2) payment to _____ and _____

equipment, materials, labor, creditors, owners

A decrease in an asset account is a ____ of cash

source

An increase in a liability or equity account is a ______ of cash

source

An increase in an asset account is a ____ of cash

use

A decrease in a liability or equity account is a ____ of cash

use