This document discusses evaluating net cash flows from operations. It explains that a business can have positive net income but negative cash flow, or vice versa. The statement of cash flows reconciles net income to net cash flow from operations by adjusting for changes in current asset and liability accounts. It describes the direct and indirect methods for determining cash flows from operations, noting the indirect method is more commonly used. Key questions the statement of cash flows can answer include how cash position changed from operating, investing and financing activities. The objective is to identify cash inflows and outflows within these activities from the start to end of an accounting period.
Basic Financial Statements - Financial AccountingFaHaD .H. NooR
Financial accounting
These slides will help you in understanding financial statements
A financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity.
Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis.
A balance sheet, also referred to as a statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.
An income statement, also known as a statement of comprehensive income, statement of revenue & expense, P&L or profit and loss report, reports on a company's income, expenses, and profits over a period of time. A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period.
A Statement of changes in equity, also known as equity statement or statement of retained earnings, reports on the changes in equity of the company during the stated period.
A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities.
For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.
Accounting 2 (cashflow) (1) asif naji.docxKhizer Zaidi
Every project big or small is successful largely due to the effort of
a number of wonderful people who have always given their
valuable advice or lent helping hand. I sincerely appreciate the
inspiration; support and guidance of all those people who have
been instrumental in making this Accounting project related
to 'CASHFLOW' a success.
Basic Financial Statements - Financial AccountingFaHaD .H. NooR
Financial accounting
These slides will help you in understanding financial statements
A financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity.
Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis.
A balance sheet, also referred to as a statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.
An income statement, also known as a statement of comprehensive income, statement of revenue & expense, P&L or profit and loss report, reports on a company's income, expenses, and profits over a period of time. A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period.
A Statement of changes in equity, also known as equity statement or statement of retained earnings, reports on the changes in equity of the company during the stated period.
A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities.
For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.
Accounting 2 (cashflow) (1) asif naji.docxKhizer Zaidi
Every project big or small is successful largely due to the effort of
a number of wonderful people who have always given their
valuable advice or lent helping hand. I sincerely appreciate the
inspiration; support and guidance of all those people who have
been instrumental in making this Accounting project related
to 'CASHFLOW' a success.
Overview of basic financial statements that every business owner needs to know to include: cash flow statement, income statement (P&L) and balance sheet.
Overview of basic financial statements that every business owner needs to know to include: cash flow statement, income statement (P&L) and balance sheet.
Cash FlowsIntroductionThe Statement of Cash Flows is the third.docxcravennichole326
Cash Flows
Introduction
The Statement of Cash Flows is the third basic financial statement that is presented with the Balance Sheet and the Income Statement on a periodic basis. By reviewing the changes in cash due to operations, investing activities, and financing activities, the analyst can better ascertain how cash was generated and spent.
The Statement of Cash Flows
The statement of cash flows was developed in the 1970s and 1980s as a reaction to the need for management to reconcile net income to available cash. Many managers questioned how a company could report a profit, but have no money, or report a loss and still have cash available; the statement of cash flows was developed to explain how the income statement related to the available cash. The statement of cash flows can help managers and business owners to understand the sources and uses of cash, and predict future cash requirements so that needs may be met.
The cash flow statement focuses attention on a firm's ability to generate cash internally, its management of current assets and current liabilities, and the details of its investments and its external financing (Libby, Libby, & Short, 2004). It is designed to help both managers and analysts answer important cash-related questions such as these:
Will the company have enough cash to pay its short-term debts to suppliers and other creditors without additional borrowing?
Is the company adequately managing its accounts receivable and inventory?
Has the company made necessary investments in new productive capacity?
Did the company generate enough cash flow internally to finance necessary investment, or did it rely on external financing?
Is the company changing the makeup of its external financing?
These questions and others can be answered through the preparation and examination of the statement of cash flows.
Operating, Investing, and Financing Activities
The statement of cash flows has three main sections: (a) cash flows from operating activities, which are related to earning income from normal, recurring operations; (b) cash flows from investing activities, which are related to the acquisition and sale of productive assets; and (c) cash flows from financing activities, which are related to external financing of the enterprise. The net cash inflow or outflow for the year is the same amount as the increase or decrease in cash and cash equivalents for the year on the balance sheet. Cash equivalents are highly liquid investments with original maturities of less than three months. The operating activities section of the statement of cash flows can be prepared using either the direct or indirect method; the investing and financing activities sections are always prepared directly.
Direct Method of Determining Cash Flows from Operating Activities
The direct method for reporting cash flows from operating activities separates all of the operating transactions that result in either a deb ...
Sources of Funds:
Transactions which result in an increase in the amount of fund or working capital are called sources of fund.
The following are the sources of funds:
Funds from operations, operating profit or trading profit.
Non operating incomes.
Refund of Income Tax (received).
Issue of Shares for cash or for any other current asset.
Issue of debentures for cash or for any other current asset.
Long term and medium term loans borrowed.
Long term or medium term deposits accepted.
Sale of long term investments for cash or for any other current asset.
Sale of fixed assets for cash or for any other current asset.
Cash is the most liquid of assets.
Offers both liquidity and flexibility.
Both the beginning and the end of a company’s operating cycle.
Contrast: Accrual accounting and Cash basis accounting.
Net cash flow as the end measure of profitability.
Cash flow analysis helps in assessing liquidity, solvency, and financial flexibility.
Preparation of Funds from Operations
The term Operation means the day to day affairs of the business.
It refers to trading.
Non operating items should not be treated as operational, while ascertaining funds from operations.
Examples of Non Operating expenses:
Depreciation
Loss on sale of fixed assets.
Writing-Off of fictious assets like Goodwill
Preliminary expenses, discount or loss on issue of shares and debentures
FFA- Statement of Schedule of Changes in Working Capitaluma reur
Statement Of Schedule Of Changes In Working Capital
This statement is prepared with the help of current assets and current liabilities relating to two different periods.
An increase or decrease in respect of each of such items should be recorded to ascertain the net increase or decrease in the working capital.
An increase in the value of current assets between two different periods indicates an increase in the working capital. It is an application of funds.
An increase in the value of current liabilities between two different periods indicates decrease in the working capital. It is sources of funds.
ACC 371 Lecture 7Statement of Cash FlowsIntroductionGenerall.docxaryan532920
ACC 371 Lecture 7
Statement of Cash Flows
Introduction
Generally Accepted Accounting Principles (GAAP) typically evolves in practice, rather than being written and then followed. An example of this evolution is the financial statement called, the statement of cash flows. Managers and business owners often asked why their companies were profitable but did not have available cash, or had plenty of cash but were operating at a loss. In response to this need, accountants developed the statement of cash flows to explain how cash was provided to the company or used by the company. The statement of cash flows is now a required financial statement according to GAAP. Since the statement of cash flows was developed long after the other three statements—the balance sheet, income statement, and statement of stockholders' equity—it does not follow the same flow as the other statements and requires information from all of the other statements, as well as additional information, in order to be compiled. Today, the statement of cash flows is one of the most significant financial statements for the potential investor or creditor.
Usefulness of the Statement of Cash Flows
The statement of cash flows is useful because it shows an organization's ability to produce future cash flows, provides an indication that the organization can meet its obligations, reports the differences between net income and net cash flows, and identifies the cash and noncash investing and financing activities during the period.
Profitable operations do not always ensure positive cash flow. While net income is important, cash flow is also critical to a company's success. Cash flow permits a company to expand operations, replace worn assets, take advantage of new investment opportunities, and pay dividends to its owners. Both managers and analysts need to understand the various sources and uses of cash that are associated with business activities.
The cash flow statement focuses attention on a firm's ability to generate cash internally, its management of current assets and current liabilities, and the details of its investments and its external financing (Libby, Libby, & Short, 2004). It is designed to help both managers and analysts answer important cash-related questions such as these:
Will the company have enough cash to pay its short-term debts to suppliers and other creditors without additional borrowing?
Is the company adequately managing its accounts receivable and inventory?
Has the company made necessary investments in new productive capacity?
Did the company generate enough cash flow internally to finance necessary investment or did it rely on external financing?
Is the company changing the makeup of its external financing?
These questions and others can be answered through the preparation and examination of the statement of cash flows.
Operating, Investing, and Financing Activities
The statement has three main sections: (a) cash flows from operating activities, which are relate.
Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP). Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements.
The Indian Accounting Standards were revised in September 2016.
This presentation tells about the AS 7 on Cash Flow Statement.
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Evaluating Net Cashflow
1. FinanceManagement
EVALUATINGNETCASHFLOWS
MODUL
SEMESTER 3
Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti
Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti
Jl. IKPN Bintaro No.1, Pesanggrahan,
Tanah Kusir, Jakarta, Special Capital
Region of Jakarta, 12330, Indonesia.
2. 2
Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti
EVALUATING NET CASH FLOWS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In a hospitality operation, it is possible for an
operation to have positive net income and, at
the same time, produce a negative cash flow,
or to show a net loss and have a positive cash
flow. The operating section of a statement
of cash flows adjusts and reconciles the net
income or net loss for an operating period
to the net cash flow from operations. It is
the change in the cash account, which is
identified when net cash flow, either positive
or negative, is equal to the change in the cash
account and the actual cash on hand at the
end of the period is confirmed.
Cash includes cash on hand, cash in the
bank, and cash equivalents. Cash equivalents
typically consist of marketable securities
and short-term investments, which can
be immediately converted to cash when
the need dictates. In this discussion, cash
equivalents, marketable securities and short-
term investments will be treated as current
asset accounts, not actual cash accounts.
There are two ways of determining net
cash flows from operations—the direct and
the indirect method. The direct method
uses cash receipts from operations and
cash disbursements to create the income
statement on a cash basis. The indirect
method starts with net income and adjusts
it for change in current asset and current
liability accounts. However, the indirect
method is generally the easier and more
commonly used method, so only the
indirect method will be discussed in detail
in this chapter. The investing and financing
sections are determined the same way
regardlessofthemethodusedtodetermine
cash flows from operations.
Management must understand the
procedures and the necessity to implement
effective cash management policies and
procedures. The SCF can answer some of
the following key questions:
- How much did the cash position increase
or decrease from operating activities since
the last accounting period?
- Did normal operation activities generate
the major portion of cash inflows?
- How much was invested in capital assets,
such as new furnishings, equipment, or
other long-term physical assets?
- How much cash was recovered from the
disposaloffurnishings,fixtures,equipment,
or other long-lived physical assets?
- How much cash was received from the
disposal of long-term investments?
Gambar : Komunikasi Keperawatan
3. 3
Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti
Gambar : Komunikasi Keperawatan
- How much cash was obtained by incurring long-term liabilities?
- How much cash was used to reduce or pay off long-term liabilities?
- How much cash was received through the sale of ownership equity?
- What amount was paid out as dividends?
- What amount of cash did the proprietor or the partners withdraw?
The SCF allows the identification of cash inflows and cash outflows within operating activities,
investing activities, and financing activities. The three sections have the objective of identifying
cash flows that occurred from the beginning to the end of a period of operations. To prepare an
SCF, the reported accrual net income (or loss) is converted from an accrual basis to a cash basis
by evaluating the balance sheet accounts that have changed during an operating period. The final
result of the SCF is a positive or negative net cash flow, which is equal to the total change in the cash
account between the beginning and the end of the year’s balance sheets. In the operating section,
each active current asset and current liability account except cash is evaluated to determine the
change in the account for the entire reporting period. The change is identified as an increase or
decrease, and the type of account being evaluated determines how the change is treated. A positive
cash flow is added, and a negative cash flow is deducted in the process of converting accrual net
income (or net loss) to a cash basis.
4. 4
Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti Modul Trisakti
The Concept of Tourism Services
economic impact of tourism
The source of tourism service sector growth
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