Gíao trình kế toán bằng tiếng anh ch13

Chapter 13 Statement of Cash Flows Learning Objectives After studying this chapter, you should be able to: [1] Indicate the usefulness of the statement of cash flows [2] Distinguish among operating, investing, and financing activities [3] Prepare a statement of cash flows using the indirect method [4] Analyze the statement of cash flows 13-1 Preview of Chapter 13 Managerial Accounting Sixth Edition Weygandt Kimmel Kieso 13-2 Statement of Cash Flows Usefulness of the Statement of Cash Flows Helps investors, creditors, and others to assess: Entity’s ability to generate future cash flows Entity’s ability to pay dividends and meet obligations Reasons for difference between net income and net cash provided (used) by operating activities Cash investing and financing transactions during the period 13-3 LO Indicate the usefulness of the statement of cash flows Statement of Cash Flows Classification of Cash Flows Operating Activities Income Statement Items Investing Activities Changes in Investments and Long-Term Asset Items Financing Activities Changes in LongTerm Liabilities and Stockholders’ Equity Items 13-4 LO Distinguish among operating, investing, and financing activities Statement of Cash Flows Typical receipt and payment classifications Illustration 13-1 Operating activities - Income statement items Cash inflows: From sale of goods or services From interest received and dividends received Cash outflows: To suppliers for inventory To employees for services To government for taxes To lenders for interest To others for expenses 13-5 LO Distinguish among operating, investing, and financing activities Statement of Cash Flows Typical receipt and payment classifications Illustration 13-1 Investing activities - Changes in investments and long-term assets Cash inflows: From sale of property, plant, and equipment From sale of investments in debt or equity securities From collection of principal on loans to other entities Cash outflows: To purchase property, plant, and equipment To purchase investments in debt or equity securities To make loans to other entities 13-6 LO Distinguish among operating, investing, and financing activities Statement of Cash Flows Typical receipt and payment classifications Illustration 13-1 Financing activities - Changes in long-term liabilities and stockholders’ equity Cash inflows: From sale of common stock From issuance of long-term debt (bonds and notes) Cash outflows: To stockholders as dividends To redeem long-term debt or reacquire capital stock (treasury stock) 13-7 LO Distinguish among operating, investing, and financing activities Statement of Cash Flows Significant Noncash Activities Direct issuance of common stock to purchase assets Conversion of bonds into common stock Direct issuance of debt to purchase assets Exchanges of plant assets Companies report these activities in either a separate schedule at the bottom of the statement of cash flows or in a separate note or supplementary schedule to the financial statements 13-8 LO Distinguish among operating, investing, and financing activities 13-9 Statement of Cash Flows Format of the Statement of Cash Flows Order of Presentation: Direct Method Operating activities Investing activities Indirect Method Financing activities The cash flows from operating activities section always appears first, followed by the investing and financing sections 13-10 LO Distinguish among operating, investing, and financing activities APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Illustration 13B-1 13-57 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Illustration 13B-1 13-58 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Illustration 13B-1 13-59 Additional information for 2014: Depreciation expense was comprised of $6,000 for building and $3,000 for equipment The company sold equipment with a book value of $7,000 (cost $8,000, less accumulated depreciation $1,000) for $4,000 cash Issued $110,000 of long-term bonds in direct exchange for land A building costing $120,000 was purchased for cash Equipment costing $25,000 was also purchased for cash Issued common stock for $20,000 cash The company declared and paid a $29,000 cash dividend LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Cash Receipts from Customers For Computer Services, accounts receivable decreased $10,000 Illustration 13B-3 Revenues from sales Add: Decrease in accounts receivable Cash receipts from customers $ 507,000 10,000 $517,000 Illustration 13B-4 13-60 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Cash Payments to Suppliers Illustration 13B-6 In 2014, inventory increased $5,000 and cash payments to suppliers were $139,000 Illustration 13B-7 Illustration 13B-9 Illustration 13B-8 13-61 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Cash Payments for Operating Expenses Cash payments for operating expenses were $111,000 Illustration 13B-10 Illustration 13B-11 13-62 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Cash Payments for Income Taxes Cash payments for income taxes were $49,000 Illustration 13B-12 Illustration 13B-13 13-63 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Operating activities section of the statement of cash flows Illustration 13B-14 13-64 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Step 2: Investing and Financing Activities Increase in Equipment (1) purchased for cash equipment costing $25,000, and (2) it the sale $4,000 of equipment costing $8,000, whose book value was $7,000 Illustration 13B-15 13-65 LO APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Step 2: Investing and Financing Activities Increase in Land The company purchased land of $110,000 by directly exchanging bonds for land Increase in Bonds Payable Bonds Payable increased $110,000 The additional information indicated that company acquired land by directly exchanging bonds for land 13-66 Significant noncash investing and financing transaction LO Prepare a statement of cash flows using the direct method APPENDIX 13B STATEMENT OF CASH FLOWS DIRECT METHOD Step 2: Investing and Financing Activities Increase in Common Stock The additional information section notes that this increase of $20,000 resulted from the issuance of new shares of stock Increase in Retained Earnings The $116,000 net increase in Retained Earnings resulted from net income of $145,000 and the declaration and payment of a cash dividend of $29,000 13-67 Financing Section Financing activity (cash dividend) LO Prepare a statement of cash flows using the direct method APPENDIX 13B Step 3: Net Change in Cash Illustration 13B-16 13-68 STATEMENT OF CASH FLOWS DIRECT METHOD APPENDIX 13C T-ACCOUNT APPROACH What this means is that the change in cash is equal to the change in all of the other balance sheet accounts Another way to think about this is that if we analyze the changes in all of the noncash balance sheet accounts, we will explain the change in the cash account 13-69 Illustration 13C-1 APPENDIX 13C 13-70 Copyright Copyright © 2012 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein 13-71