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Chapter 13 - Statement of Cashflows
Terms in this set (11)
Accrual Basis Accounting
Revenues are recorded when they are earned (when the sale takes place), rather than when cash is received on the sale. Likewise, expenses are recorded when they are incurred, rather than when they are paid.
Very safe, highly liquid assets that are readily convertible to cash
Ex: Money Market Funds, Certificates that mature in less than 3 months, US Treasury Bills
Comparative Balance Sheets
A comparison of the balance sheets from the end of the two fiscal periods, usually highlighting the changes in each account.
A method of presenting cash flows from operating activities that separately lists the receipt and payment of cash for specific operating activities.
Activities that either generate capital for the company or pay it back. Includes all activities that affect long term liabilities and owners equity.
Ex: Issuing stock or long term debt, paying dividends, repaying principal amounts on loans.
Free Cash Flow
The amount of excess cash a business generates after taking into consideration the capital expenditures necessary to maintain its business.
Cash Flows from Operating Activities - Capital Expenditures
A method of presenting the cash flows from operating activities that begins with the company's net income, which is prepared on an acrrual basis and then reconciles it back to the cash basis through a series of adjustments.
Activities that involve buying or selling long-term assets such as buying or selling property, plant, or equipment; buying or selling stock in other companies, or loaning money to other companies with the goal of earning interest income from the loan.
Net Book Value
Original Cost of Plant/Equipment - Accumulated Depreciation
The day to day profit making activities of the company such as making or buying inventoy, selling inventory, selling services, paying emplyees, advertising, and so forth. Also includes any other acitivity that affects net income, current assets, or current liabilities.
Statement of Cashflows
One of the four basic financial statements; Shows the overall increase or decrease in cash during the period as well as ow the company generated and used cash during the period.
THIS SET IS OFTEN IN FOLDERS WITH...
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