Statement of Cash Flows - Vocabulary Flashcards

Vocabulary flashcards covering key terms from the notes on the Statement of Cash Flows (operating, investing, financing).

Statement of Cash Flows

A financial statement showing a company’s cash receipts and cash payments categorized into Operating, Investing, and Financing activities.

Operating Activities

Cash flows related to the entity’s core business operations and revenue-generating activities; these affect net income.

Investing Activities

Cash flows from acquiring or disposing of non-current assets such as PPE and intangible assets.

Financing Activities

Cash flows from changes in equity and non-current liabilities, such as owner investments, withdrawals, and loan proceeds/repayments.

Cash Inflow

Receipt of cash that increases the cash balance (e.g., sales, collections from customers).

Cash Outflow

Payment of cash that decreases the cash balance (e.g., purchases, salaries, payments to suppliers).

Non-current Assets

Long-term assets not expected to be converted to cash within one year, such as PPE and intangible assets.

PPE (Property, Plant and Equipment)

Tangible long-term assets used in operations (e.g., buildings, equipment).

Intangible Assets

Long-term assets without physical form (e.g., patents, goodwill).

Equity

Owner’s claim on the assets; a financing source reflecting the owner’s investment and retained earnings.

Non-current Liabilities

Long-term obligations owed by the business (e.g., long-term loans).

Beginning Cash Balance

Cash on hand at the start of the accounting period.

Ending Cash Balance

Cash on hand at the end of the accounting period.

Proceeds from a Bank Loan

Cash inflow from borrowing from a bank; a financing activity.

Cash Investment by Owner

Cash contributed by the owner to the business; financing activity.

Payment to Suppliers

Cash outflow to suppliers for goods/services (operating activity).

Collection from Customers

Cash inflow from customers for services or sales (operating activity).

Purchase of Equipment

Cash outflow to acquire PPE (investing activity).

Withdrawal from Owner

Cash outflow by the owner from the business; financing activity.

Decision Rule for Classification

Rule to classify cash transactions: NI-affecting items → Operating; non-current asset changes → Investing; equity or non-current liability changes → Financing.