ACCTG 211 Statement of Cash Flows

When accounts receivable grows, what is the affect on the cash account?

Less cash is collected.

As A/R increases, customers owe us more money, therefore we haven’t received the money yet, and have less cash.

When accounts payable decreases, what is the affect on the cash account?

decrease in cash.

we paid out more because now we owe less to suppliers.

what sort of operating expense is prepaid expenses?

operating cash outflow

if there is no balance sheet account for an item, what is the cash flow amount?

the cash flow amount is equal to the expense on income statement

what cash flow is cash paid for interest?

interest is an operating cash flow.

Because interest shows up on the income statement, that is how the U.S. GAAP records it.

what is special about depreciation expense?

it is considered a non-cash expense

it is EXCLUDED from the statement of cash flows

other gains or losses are NOT what type of cash flow?

operating activities.

because they are non-cash or, investing or financing activities

what type of cash flow are dividends?

financing cash outflow

what is the order of the statement of cash flows

Operating, Investing, Financing

OIF - Only In Florida

how to find net profit margin?

(Net income/net sales) x 100

buying back shares causes EPS to increase or decrease?

increase

debt is what cash flow?

financing

equipment acquired by issuing notes

noncash

DLG

Depreciation, Loss, Gain

AAS

add, add, subtract

cash received from the sale of inventory

operating activity

cash paid for the purchase of raw materials

operating activities

cash payment of a dividend

financing

Rebecca is changing for some BS

Revenue or Expenses from the income statement changed based of the Balance Sheet entries

what two accounts are used when declaring a dividend?

Debit Retained Earnings

Credit Dividend Payable

what two accounts are used when paying a dividend

Debit dividends payable

credit CASH

declaring dividends affects what account?

decreases retained earnings, no effect on net income

under the indirect method, what happens to depreciation expense and gains/losses?

Depreciation expense needs to be added back in

Losses are added

Gains are subtracted

We only switch the sign for current assets for which method?

indirect method

How to find total SE

beginning equity + stock issued + net income - dividends - treasury stock

total SE equation memorization

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