Explanation of the Topic...
Cash Flow Statement
|Part 1||Introduction to the Cash Flow Statement, What Can the Statement of Cash Flows Tell Us?|
Changes in Cash, SCF Format, 1. Operating Activities, 2. Investing Activities, 3. Financing Activities, |
4. Supplemental Info., Balance Sheet Changes, Operating Activities Adjustments
|Part 3||Story to Illustrate, January Transactions and Financial Statements, February Transactions and Financial Statements|
|Part 4||March Transactions and Financial Statements|
|Part 5||April Transactions and Financial Statements|
|Part 6||May Transactions and Financial Statements|
|Part 7||Depreciation Expense, June Transactions and Financial Statements|
|Part 8||Disposal of Assets, July Transactions and Financial Statements|
The official name for the cash flow statement is the statement of cash flows. We will use both names throughout AccountingCoach.com.
The statement of cash flows is one of the main financial statements. (The other financial statements are the balance sheet, income statement, and statement of stockholders' equity.)
The cash flow statement reports the cash generated and used during the time interval specified in its heading. The period of time that the statement covers is chosen by the company. For example, the heading may state "For the Three Months Ended December 31, 2011" or "The Fiscal Year Ended September 30, 2011".
The cash flow statement organizes and reports the cash generated and used in the following categories:
|1.||Operating activities||–||converts the items reported on the income statement from the accrual basis of accounting to cash.|
|2.||Investing activities||–||reports the purchase and sale of long-term investments and property, plant and equipment.|
|3.||Financing activities||–||reports the issuance and repurchase of the company's own bonds and stock and the payment of dividends.|
|4.||Supplemental information||–||reports the exchange of significant items that did not involve cash and reports the amount of income taxes paid and interest paid.|
Because the income statement is prepared under the accrual basis of accounting, the revenues reported may not have been collected. Similarly, the expenses reported on the income statement might not have been paid. You could review the balance sheet changes to determine the facts, but the cash flow statement already has integrated all that information. As a result, savvy business people and investors utilize this important financial statement.
Here are a few ways the statement of cash flows is used.
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