Study sets, textbooks, questions
Upgrade to remove ads
Terms in this set (11)
Statement of Cash Flows
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
e.g. money market accounts, investments in U.S. government securities
Statement of Cash Flows Does:
1. Predicts future cash flows
2. Evaluates management decisions
3. Determines a company's ability to pay dividends and interest
4. Shows the relationship of net income to cash flows
What does a business need to succeed?
net income and strong cash flow
Cash flow activities that include the cash effects of transactions that create revenues and expenses and thus enter into the determination of net income.
Cash flow activities that include (a) obtaining cash from issuing debt and repaying the amounts borrowed and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends.
Cash flow activities that include (a) cash transactions that involve the purchase or disposal of investments and property, plant, and equipment using cash and (b) lending money and collecting the loans.
A method of preparing a statement of cash flows in which net income is adjusted for items that do not affect cash, to determine net cash provided by operating activities.
A method of determining net cash provided by operating activities by adjusting each item in the income statement from the accrual basis to the cash basis. The direct method shows operating cash receipts and payments.
Are financing and investing actives effected by the direct and indirect method when reporting on the statement of cash flows?
Expect for cash, changes in the current accounts are adjustments to net income on the cash flow statement because
1. An increase in noncash current asset decreases cash
2. A decrease in noncash current asset decreases cash
3. A decrease in current liability decreases cash
4. An increase in current liability increases cash
Free Cash Flow
The amount of cash available from operating activities after paying for planned investments in long-term assets and after paying dividends to shareholders.
Net cash provided by operating activities - (Cash payments planned for investments in long-term assets - Cash dividends)
Sets found in the same folder
Chapter 8 & Appendix F
Other sets by this creator
Quotes to Remember
Personal Effect Chapter 7
Chapter 5 & 6 Vocab
Abstract - Irony
Other Quizlet sets
consumer ec chapter 5
micro test 6
RET 1613 Final exam