Cash Flow Statement Review

Flashcards for Cash Flow Statement Review

Cash Flow Statement

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Direct Method (Cash Flow Statement)

A method of preparing the cash flow statement that reports major classes of gross cash receipts and gross cash payments.

Indirect Method (Cash Flow Statement)

A method of preparing the cash flow statement that starts with net income and adjusts it for non-cash items to arrive at cash flow from operations.

Net Income (Cash Flow Statement)

Starting point for the indirect method; adjusted for non-cash items.

Amortization Expense

Added back to net income in the indirect method as it's a non-cash expense.

Depreciation Expense

Added back to net income in the indirect method as it's a non-cash expense.

Unearned Revenue

Accounting entry that is recorded when a business receives advance payment for services or products that have not yet been earned.

Loss (Cash Flow Statement)

A decrease in net income, added back to net income when using the indirect method.

Gain (Cash Flow Statement)

An increase in net income, subtracted from net income when using the indirect method.

Cost of Goods Sold (COGS)

The direct costs attributable to the production of the goods sold by a company.

Accounts Receivable

Money owed to a company by its debtors.

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Accounts Payable

Money owed by a company to its creditors.

Prepaid Expenses

A type of asset that arises when a business pays for an expense in advance.

Supplies

Goods that are used in the operations of a business.

Accrued Liabilities

An expense that has been incurred but not yet paid.

Interest Expense

The cost a company incurs for borrowing funds.

Tax Expense

The total amount of income tax owed by a business or individual to a taxing authority.