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The cash flow statement reports the effects of operating, investing, and financing activities on a company's cash and cash equivalents over a period of time. It reconciles net income to the actual change in cash during the period by adjusting for non-cash revenues and expenses. The cash flow statement classifies cash flows as operating, investing, or financing activities and provides important information about a company's liquidity and ability to generate cash.
1. The document provides steps for preparing a cash flow statement from financial statements and additional information. It includes two illustrative examples showing the application of the steps.
2. The steps include preparing necessary accounts, identifying cash and non-cash transactions, and determining cash flows from operating, investing, and financing activities.
3. The examples show the preparation of adjusted accounts, calculation of cash flows from various activities, and presentation of the cash flow statement.
The document summarizes the key requirements of IAS 7 regarding cash flow statements. It states that all entities must present a cash flow statement classified into operating, investing and financing activities. It defines cash and cash equivalents and outlines the direct and indirect methods for preparing the cash flow statement.
This document provides an overview of IAS 7 requirements for cash flow statements. It defines key terms like cash and cash equivalents and outlines the classification of cash flows into operating, investing and financing activities. It also covers the direct and indirect methods for preparing the statement of cash flows and disclosure requirements.
The document provides information about cash flow statements, including their purpose, components, and preparation process. A cash flow statement shows the inflows and outflows of cash from operating, investing, and financing activities during a specific period. It reconciles net income to the actual cash changes by adjusting for non-cash items and changes in balance sheet accounts. The statement consists of sections for operating activities, investing activities, and financing activities that report cash flows from changes in working capital accounts, long-term asset balances, and long-term debt or equity positions respectively.
Pengantar Akuntansi 2 - Ch13 Statement of Cash Flowyuliapratiwi2810
This document discusses the statement of cash flows, including its usefulness, format, and preparation using the indirect method. It covers key topics such as distinguishing between operating, investing and financing activities; adjustments made to net income to reconcile to net cash from operating activities; and preparing the statement of cash flows. The objectives are to indicate the usefulness of the statement, distinguish activity types, and prepare the statement using the indirect method.
This document outlines the requirements for preparing a statement of cash flows under Indian Accounting Standard 7. It discusses the objective to provide information on an entity's cash generation and usage. The standard requires classification of cash flows as operating, investing or financing activities. It provides definitions for key terms and guidance on treatment of items like foreign currency cash flows, interest and dividends, taxes and non-cash transactions.
This document discusses the cash flow statement. It begins by explaining the importance of cash for businesses and how cash flow statements provide information about cash inflows and outflows over a period of time. It then covers the purpose and objectives of the cash flow statement, including showing where cash came from, what it was used for, and the change in cash balance. The document also discusses the limitations of cash flow statements and the differences between cash flow statements and funds flow statements. Finally, it classifies common types of cash inflows and outflows into operating, investing, and financing activities.
The cash flow statement reports the effects of operating, investing, and financing activities on a company's cash and cash equivalents over a period of time. It reconciles net income to the actual change in cash during the period by adjusting for non-cash revenues and expenses. The cash flow statement classifies cash flows as operating, investing, or financing activities and provides important information about a company's liquidity and ability to generate cash.
1. The document provides steps for preparing a cash flow statement from financial statements and additional information. It includes two illustrative examples showing the application of the steps.
2. The steps include preparing necessary accounts, identifying cash and non-cash transactions, and determining cash flows from operating, investing, and financing activities.
3. The examples show the preparation of adjusted accounts, calculation of cash flows from various activities, and presentation of the cash flow statement.
The document summarizes the key requirements of IAS 7 regarding cash flow statements. It states that all entities must present a cash flow statement classified into operating, investing and financing activities. It defines cash and cash equivalents and outlines the direct and indirect methods for preparing the cash flow statement.
This document provides an overview of IAS 7 requirements for cash flow statements. It defines key terms like cash and cash equivalents and outlines the classification of cash flows into operating, investing and financing activities. It also covers the direct and indirect methods for preparing the statement of cash flows and disclosure requirements.
The document provides information about cash flow statements, including their purpose, components, and preparation process. A cash flow statement shows the inflows and outflows of cash from operating, investing, and financing activities during a specific period. It reconciles net income to the actual cash changes by adjusting for non-cash items and changes in balance sheet accounts. The statement consists of sections for operating activities, investing activities, and financing activities that report cash flows from changes in working capital accounts, long-term asset balances, and long-term debt or equity positions respectively.
Pengantar Akuntansi 2 - Ch13 Statement of Cash Flowyuliapratiwi2810
This document discusses the statement of cash flows, including its usefulness, format, and preparation using the indirect method. It covers key topics such as distinguishing between operating, investing and financing activities; adjustments made to net income to reconcile to net cash from operating activities; and preparing the statement of cash flows. The objectives are to indicate the usefulness of the statement, distinguish activity types, and prepare the statement using the indirect method.
This document outlines the requirements for preparing a statement of cash flows under Indian Accounting Standard 7. It discusses the objective to provide information on an entity's cash generation and usage. The standard requires classification of cash flows as operating, investing or financing activities. It provides definitions for key terms and guidance on treatment of items like foreign currency cash flows, interest and dividends, taxes and non-cash transactions.
This document discusses the cash flow statement. It begins by explaining the importance of cash for businesses and how cash flow statements provide information about cash inflows and outflows over a period of time. It then covers the purpose and objectives of the cash flow statement, including showing where cash came from, what it was used for, and the change in cash balance. The document also discusses the limitations of cash flow statements and the differences between cash flow statements and funds flow statements. Finally, it classifies common types of cash inflows and outflows into operating, investing, and financing activities.
The document discusses cash flow statements, which show a company's cash inflows and outflows from operating, investing, and financing activities. Cash flow from operating activities includes cash from sales, services, and payments for supplies, employees, taxes. Investing activities involve cash from purchases/sales of property and equipment and other investments. Financing activities include cash from issuing/repaying debt and equity. The cash flow statement is important for understanding a company's liquidity and ability to meet obligations.
This document provides guidance on preparing a cash flow statement from operating activities. It outlines three levels of items to include or exclude when calculating cash from operating activities. Level 1 includes appropriations like dividends and reserves that are added back. Level 2 includes non-cash expenses like depreciation that are added back. Level 3 adjusts for changes in working capital like increases or decreases in current assets and liabilities. The document also provides an example of how to prepare a provision for tax account to determine the tax paid and made for the period.
The document defines a cash flow statement as a summary of cash receipts and payments for a period of time that explains changes in a firm's cash position. It has three sections - operating, investing, and financing activities - that show cash inflows and outflows. Operating activities relate to core business operations, investing activities involve long-term asset acquisition and disposal, and financing activities pertain to raising and repaying financial capital. The cash flow statement provides information on a firm's liquidity, cash generation, and ability to meet debt obligations.
The document summarizes key aspects of a cash flow statement, including that it shows how changes in balance sheet accounts and income affect cash and cash equivalents through operating, investing, and financing activities. It is divided into three parts - operating activities related to a company's core business, investing activities related to capital asset investments and gains/losses, and financing activities related to raising and repaying capital. The cash flow statement is useful for accounting personnel, lenders, investors, employees, and shareholders of a business.
This document discusses Indian Accounting Standard 3 on cash flow statements. It defines key terms like cash, cash equivalents, operating activities, investing activities and financing activities. It explains the direct and indirect methods of preparing cash flow statements and requirements around classification of cash flows from various transactions like tax, foreign exchange, dividends and interest. The standard aims to provide useful information on changes in cash balances to investors and other stakeholders.
This document provides guidance on preparing a cash flow statement using the indirect method. It includes a cash flow statement template and explanations of the general rules for reconciling net income to net cash provided by operations. Specific examples are given for cash flows from investing and financing activities such as additions/disposals of property, plant, and equipment, increases/decreases in debt, and payments of dividends.
The statement of cash flows identifies cash inflows and outflows for a period, usually one year. It is based on cash accounting. Cash includes cash on hand and demand deposits, less overdrafts due within 24 hours. Cash equivalents are short-term, highly liquid investments convertible to cash within 3 months. The statement categorizes cash flows as operating, investing, or financing activities. The indirect method is used to disclose cash flows to external parties, starting with operating profit and adjusting for non-cash items and changes in working capital. Revaluations and bonus share issues are not shown as they do not impact cash.
Material for PGPSE participants of AFTERSCHOOOL CENTRE FOR SOCIAL ENTREPRENEURSHIP. PGPSE is an entrepreneurship oriented programme, open for all, free for all.
The document discusses the concept, objectives, importance and preparation of a cash flow statement. A cash flow statement shows how cash flows in and out of a business over an accounting period. It categorizes cash flows as operating, investing and financing activities. The cash flow statement is important because it provides information about a company's liquidity and cash generating ability to assess its financial health. It is prepared by determining cash inflows and outflows from each category of activities.
This document provides definitions and guidance on preparing a statement of cash flows according to IAS 7. It defines key terms like cash and cash equivalents. It explains how to classify cash flows from operating, investing and financing activities and provides examples of cash flows that would fall under each classification. It also discusses the direct and indirect methods for preparing the statement of cash flows and how foreign currency, interest, dividends and taxes should be reported.
The document discusses the requirements for cash flow statements in India according to IAS-7 and AS-3. It states that in India, AS-3 currently covers the provisions of IAS-7, and the ICAI has issued an exposure draft of a revised AS-3 that aligns with IAS-7 and will be effective from April 1, 2011. It also provides details on the key requirements and differences between IAS-7 and the existing and revised versions of AS-3.
The document provides an overview of the statement of cash flows, including its purpose, classification of cash flows into operating, investing and financing activities, and methods for preparing the statement. Specifically, it discusses how to determine cash flows from operating activities using the indirect method by making adjustments to items on the income statement that do not affect cash, such as depreciation, gains and losses, and changes in current assets and liabilities.
The document provides an overview of IAS 7 Statement of Cash Flows. It discusses:
1) The objective of the statement of cash flows is to provide information about a company's cash receipts and cash payments.
2) Cash flows are classified into operating, investing and financing activities.
3) The statement of cash flows can be prepared using either the direct or indirect method, with the direct method being encouraged for operating cash flows.
This document summarizes IAS-7 Cash Flow Statements. The standard requires entities to prepare a statement of cash flows that classifies cash flows during a period into operating, investing, and financing activities. It defines key terms and outlines how to present and report cash flows from these three activities, including using the direct or indirect method. Cash flows from interest, dividends, taxes, and acquisitions/disposals must be separately classified and disclosed.
Cash flow statements show the inflows and outflows of cash over a period of time. They classify cash flows into three categories: operating, investing, and financing activities. Cash flow statements are prepared using either the direct or indirect method. They are useful for short-term financial planning, preparing cash budgets, comparing actual cash flows to budgets, and assessing a company's ability to generate cash.
The document provides an overview of International Accounting Standard 7 on the statement of cash flows. It discusses the scope, objectives, definitions, presentation requirements, and reporting requirements for the statement of cash flows including the classification of cash flows as operating, investing and financing activities. It also covers topics like foreign currency cash flows, interest and taxes, subsidiaries, non-cash items, and the components of cash and cash equivalents that must be disclosed.
Accounting Standard-3 Cash Flow Statement by Nithin RajChinnu Raj
Are you Searching for the Complete Information on AS-3 (Cash Flow Statement)??You have come Correctly..Here is the Brief Description on Cash Flow Statement which enables the Students to gain the complete knowledge on AS-3.
Thanks for viewing my PPT......
This document discusses key concepts related to the statement of cash flows (SCF). It begins by outlining the learning objectives for understanding the SCF. It then defines cash and the cash account, explaining the sources and uses of cash. It introduces the SCF and describes its three sections for reporting cash flows from operating, investing, and financing activities. Examples of transactions in each section are provided. The document also demonstrates how to analyze changes in accounts like accounts receivable, inventory, and accounts payable to determine cash amounts. It contrasts the direct and indirect methods for preparing the operating activities section of the SCF.
This document discusses adjusting entries in accounting. It explains that adjusting entries are necessary at the end of an accounting period to update accounts for transactions that have occurred but not yet been recorded. There are two main types of adjusting entries - deferrals and accruals. Deferrals relate to prepaid expenses and unearned revenue, while accruals accumulate revenues and expenses that were incurred in a period but not yet recorded. The document provides examples of prepaid expenses, depreciation, and interest earned to illustrate the adjusting entry process.
Preparing financial statements involves the process of combining accounting information into a standardised financial set. Completed financial statements are provided to management, creditors, creditors, and investors, who use them to assess the performance, liquidity, and cash flow of the organisation.
The document discusses cash flow statements, which show a company's cash inflows and outflows from operating, investing, and financing activities. Cash flow from operating activities includes cash from sales, services, and payments for supplies, employees, taxes. Investing activities involve cash from purchases/sales of property and equipment and other investments. Financing activities include cash from issuing/repaying debt and equity. The cash flow statement is important for understanding a company's liquidity and ability to meet obligations.
This document provides guidance on preparing a cash flow statement from operating activities. It outlines three levels of items to include or exclude when calculating cash from operating activities. Level 1 includes appropriations like dividends and reserves that are added back. Level 2 includes non-cash expenses like depreciation that are added back. Level 3 adjusts for changes in working capital like increases or decreases in current assets and liabilities. The document also provides an example of how to prepare a provision for tax account to determine the tax paid and made for the period.
The document defines a cash flow statement as a summary of cash receipts and payments for a period of time that explains changes in a firm's cash position. It has three sections - operating, investing, and financing activities - that show cash inflows and outflows. Operating activities relate to core business operations, investing activities involve long-term asset acquisition and disposal, and financing activities pertain to raising and repaying financial capital. The cash flow statement provides information on a firm's liquidity, cash generation, and ability to meet debt obligations.
The document summarizes key aspects of a cash flow statement, including that it shows how changes in balance sheet accounts and income affect cash and cash equivalents through operating, investing, and financing activities. It is divided into three parts - operating activities related to a company's core business, investing activities related to capital asset investments and gains/losses, and financing activities related to raising and repaying capital. The cash flow statement is useful for accounting personnel, lenders, investors, employees, and shareholders of a business.
This document discusses Indian Accounting Standard 3 on cash flow statements. It defines key terms like cash, cash equivalents, operating activities, investing activities and financing activities. It explains the direct and indirect methods of preparing cash flow statements and requirements around classification of cash flows from various transactions like tax, foreign exchange, dividends and interest. The standard aims to provide useful information on changes in cash balances to investors and other stakeholders.
This document provides guidance on preparing a cash flow statement using the indirect method. It includes a cash flow statement template and explanations of the general rules for reconciling net income to net cash provided by operations. Specific examples are given for cash flows from investing and financing activities such as additions/disposals of property, plant, and equipment, increases/decreases in debt, and payments of dividends.
The statement of cash flows identifies cash inflows and outflows for a period, usually one year. It is based on cash accounting. Cash includes cash on hand and demand deposits, less overdrafts due within 24 hours. Cash equivalents are short-term, highly liquid investments convertible to cash within 3 months. The statement categorizes cash flows as operating, investing, or financing activities. The indirect method is used to disclose cash flows to external parties, starting with operating profit and adjusting for non-cash items and changes in working capital. Revaluations and bonus share issues are not shown as they do not impact cash.
Material for PGPSE participants of AFTERSCHOOOL CENTRE FOR SOCIAL ENTREPRENEURSHIP. PGPSE is an entrepreneurship oriented programme, open for all, free for all.
The document discusses the concept, objectives, importance and preparation of a cash flow statement. A cash flow statement shows how cash flows in and out of a business over an accounting period. It categorizes cash flows as operating, investing and financing activities. The cash flow statement is important because it provides information about a company's liquidity and cash generating ability to assess its financial health. It is prepared by determining cash inflows and outflows from each category of activities.
This document provides definitions and guidance on preparing a statement of cash flows according to IAS 7. It defines key terms like cash and cash equivalents. It explains how to classify cash flows from operating, investing and financing activities and provides examples of cash flows that would fall under each classification. It also discusses the direct and indirect methods for preparing the statement of cash flows and how foreign currency, interest, dividends and taxes should be reported.
The document discusses the requirements for cash flow statements in India according to IAS-7 and AS-3. It states that in India, AS-3 currently covers the provisions of IAS-7, and the ICAI has issued an exposure draft of a revised AS-3 that aligns with IAS-7 and will be effective from April 1, 2011. It also provides details on the key requirements and differences between IAS-7 and the existing and revised versions of AS-3.
The document provides an overview of the statement of cash flows, including its purpose, classification of cash flows into operating, investing and financing activities, and methods for preparing the statement. Specifically, it discusses how to determine cash flows from operating activities using the indirect method by making adjustments to items on the income statement that do not affect cash, such as depreciation, gains and losses, and changes in current assets and liabilities.
The document provides an overview of IAS 7 Statement of Cash Flows. It discusses:
1) The objective of the statement of cash flows is to provide information about a company's cash receipts and cash payments.
2) Cash flows are classified into operating, investing and financing activities.
3) The statement of cash flows can be prepared using either the direct or indirect method, with the direct method being encouraged for operating cash flows.
This document summarizes IAS-7 Cash Flow Statements. The standard requires entities to prepare a statement of cash flows that classifies cash flows during a period into operating, investing, and financing activities. It defines key terms and outlines how to present and report cash flows from these three activities, including using the direct or indirect method. Cash flows from interest, dividends, taxes, and acquisitions/disposals must be separately classified and disclosed.
Cash flow statements show the inflows and outflows of cash over a period of time. They classify cash flows into three categories: operating, investing, and financing activities. Cash flow statements are prepared using either the direct or indirect method. They are useful for short-term financial planning, preparing cash budgets, comparing actual cash flows to budgets, and assessing a company's ability to generate cash.
The document provides an overview of International Accounting Standard 7 on the statement of cash flows. It discusses the scope, objectives, definitions, presentation requirements, and reporting requirements for the statement of cash flows including the classification of cash flows as operating, investing and financing activities. It also covers topics like foreign currency cash flows, interest and taxes, subsidiaries, non-cash items, and the components of cash and cash equivalents that must be disclosed.
Accounting Standard-3 Cash Flow Statement by Nithin RajChinnu Raj
Are you Searching for the Complete Information on AS-3 (Cash Flow Statement)??You have come Correctly..Here is the Brief Description on Cash Flow Statement which enables the Students to gain the complete knowledge on AS-3.
Thanks for viewing my PPT......
This document discusses key concepts related to the statement of cash flows (SCF). It begins by outlining the learning objectives for understanding the SCF. It then defines cash and the cash account, explaining the sources and uses of cash. It introduces the SCF and describes its three sections for reporting cash flows from operating, investing, and financing activities. Examples of transactions in each section are provided. The document also demonstrates how to analyze changes in accounts like accounts receivable, inventory, and accounts payable to determine cash amounts. It contrasts the direct and indirect methods for preparing the operating activities section of the SCF.
This document discusses adjusting entries in accounting. It explains that adjusting entries are necessary at the end of an accounting period to update accounts for transactions that have occurred but not yet been recorded. There are two main types of adjusting entries - deferrals and accruals. Deferrals relate to prepaid expenses and unearned revenue, while accruals accumulate revenues and expenses that were incurred in a period but not yet recorded. The document provides examples of prepaid expenses, depreciation, and interest earned to illustrate the adjusting entry process.
Preparing financial statements involves the process of combining accounting information into a standardised financial set. Completed financial statements are provided to management, creditors, creditors, and investors, who use them to assess the performance, liquidity, and cash flow of the organisation.
Chapter 4 THE ADJUSTMENT PROCESSPrinciples of Accounting, VoWilheminaRossi174
Chapter 4 THE ADJUSTMENT PROCESS
Principles of Accounting, Volume 1: Financial Accounting
PowerPoint Image Slideshow
Chapter Outline
4.1 Explain the Concepts and Guidelines Affecting Adjusting Entries
4.2 Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries
4.3 Record and Post the Common Types of Adjusting Entries
4.4 Use the Ledger Balances to Prepare an Adjusted Trial Balance
4.5 Prepare Financial Statements Using the Adjusted Trial Balance
Module 4.1 Explain the Concepts and Guidelines Affecting Adjusting
Entries
Public companies use either US generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS), as allowed by the Securities and Exchange Commission (SEC) regulations.
Companies, public or private, using US GAAP or IFRS prepare their financial statements using the rules of accrual accounting.
With accrual basis accounting, revenues and expenses are recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or payments occur. Individually, these are the revenue recognition principle and the expense recognition principle. Collectively they are known as the matching principle.
The accrual method standardizes reporting information for comparability purposes.
Comparable information is important to external users of information trying to make investment or lending decisions, and to internal users trying to make decisions about company performance, budgeting, and growth strategies.
Some nonpublic companies may choose to use cash basis accounting rather than accrual basis accounting to report financial information.
Teacher Notes: In this chapter, we look at Steps 5, 6, and 7 of the accounting cycle, but to understand why these stages occur, it is first necessary to understand the following concepts: accrual accounting, accounting period, and calendar versus fiscal year.
3
An accounting period breaks down company financial information into specific time spans and can cover a month, a quarter, a half-year, or a full year.
Public companies governed by GAAP are required to present quarterly (three-month) accounting period financial statements called 10-Qs.
Most public and private companies keep monthly, quarterly, and yearly (annual) period information. This is helpful for users needing up-to-date financial data to make decisions about company investment and growth.
Accounting Period
A company may choose its yearly reporting period to be based on a calendar or fiscal year.
A calendar year shows financial data from January 1 to December 31 of a specific year.
A fiscal year is a twelve-month reporting cycle that can begin in any month and records financial data for that consecutive twelve-month period.
An interim period is any reporting period shorter than a full year (fiscal or calendar). They can be monthly, quarterly, or half-year statements. The information contained on these statements is timelier than waiting for ...
Solutions manual for fundamental accounting principles volume 1 canadian 15th...Miller612
Here are the journal entries to record the transactions:
Jan. 1 Accounts Receivable 1,000
Service Revenue 1,000
To record services provided on account
Jan. 5 Cash 400
Accounts Receivable 400
To record collection of account receivable
Jan. 10 Accounts Payable 920
Cash 920
To record payment of accounts payable
Jan. 15 Service Revenue 900
Accounts Receivable 900
To record services provided on account
Jan. 20 Cash 1,800
Accounts Receivable 1,800
To record collection of accounts receivable
Jan. 25 Cash 2,500
Accounts Payable 2,500
To record payment of accounts payable
Jan. 30 Accounts
This document discusses key accounting concepts related to accrual accounting including the revenue recognition principle, matching principle, and differences between cash basis and accrual basis accounting. It explains why adjusting entries are needed to follow these concepts and identifies major types of adjusting entries such as those for deferrals and accruals. Specific topics covered include preparing adjusting entries for prepaid expenses, unearned revenues, accrued revenues, and accrued expenses.
This document provides an overview of financial modeling for investment banking and private equity. It discusses spreading historical financial statements, deriving historic ratios and trends, projecting financial statements, and integrating projections. Key steps include adjusting historic income statements, calculating important ratios from the past, projecting revenue based on growth or market factors, estimating expenses as percentages of revenue or costs, and ensuring balance sheet and cash flow projections reconcile. Maintaining a simple and clearly formatted model is emphasized.
The document provides an overview of important financial accounting concepts that startup founders should understand, such as choosing between cash-based or accrual-based accounting, the components of financial statements, when to hire an accountant, basic documentation and record-keeping, distinguishing capital vs revenue expenditures, analyzing inventory and receivables, and an introduction to presumptive taxation. It aims to help founders better manage the financial health and tax obligations of their new business.
The document provides steps for preparing financial statements. It explains that financial statements include a balance sheet, income statement, statement of cash flows, and notes. It outlines 15 steps for preparing the statements, which include reconciling accounts, accruing expenses, calculating depreciation, conducting inventory counts, creating journal entries, and distributing the final statements. It also provides overviews of how to prepare the balance sheet, income statement, and statement of cash flows.
final accounts text and problems related to income and balance sheetlearn2writepbs
This document discusses the need for adjustments when preparing financial statements according to the accrual concept of accounting. It provides examples of outstanding expenses and prepaid expenses that require adjustments, such as insurance premiums and salaries. The purpose of adjustments is to ensure the financial statements reflect the true profit/loss and financial position of the business by including all revenues earned and expenses incurred during the accounting period. Items that typically need adjusting include closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provisions, and adjustments related to the manager, capital, and interest. The document includes Ankit's trial balance as an example to demonstrate how adjustments are recorded and reflected in the financial statements
The document provides guidance on how to prepare a cash flow statement for a business. It explains that a cash flow statement traces the flow of funds into and out of a business during an accounting period and is important for financial management. It then outlines the key components of a cash flow statement, including operating, investing and financing activities. The document walks through how to construct a cash flow statement step-by-step using sample income statement and balance sheet data from a fictional company. It covers calculating cash flows directly from revenue and expense accounts or indirectly by reconciling net income.
Resource Ch. 4 of Financial AccountingComplete Exercise BE4.docxdebishakespeare
Resource: Ch. 4 of Financial Accounting
Complete Exercise BE4-1.
Complete Problems 4-2A & 4-3A.
Answer the following:
? Commercial accounting and generally accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis.
? Describe both bases of accounting and explain the differences.
Submit as either a Microsoft? Excel? or Microsoft? Word document
Ch 4 attached
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Financial accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons.
study objectives
After studying this chapter, you should be able to:
1 Explain the revenue recognition principle and the expense
recognition principle.
2 Differentiate between the cash basis and the accrual basis of
accounting.
3 Explain why adjusting entries are needed, and identify the
major types of adjusting entries.
4 Prepare adjusting entries for deferrals.
5 Prepare adjusting entries for accruals.
6 Describe the nature and purpose of the adjusted trial balance.
7 Explain the purpose of closing entries.
8 Describe the required steps in the accounting cycle.
9 Understand the causes of differences between net
income and cash provided by operating activities.
chapter
ACCRUAL ACCOUNTING
CONCEPTS
4
● Scan Study Objectives
● Read Feature Story
● Scan Preview
● Read Text and Answer
p. 175 p. 180 p. 185 p. 189
● Work Using the Decision Toolkit
● Review Summary of Study Objectives
● Work Comprehensive p. 197
● Answer Self-Test Questions
● Complete Assignments
● Go to WileyPLU S for practice and tutorials
● Read A Look at I FR S p. 224
● the navigator
Do it!
Do it!
✓
162
c04AccrualAccountingConcepts.qxd 8/3/10 1:50 PM Page 162
feature story
163
The accuracy of the financial reporting system de-
pends on answers to a few fundamental questions. At
what point has revenue been earned? At what point
is the earnings process complete? When have ex-
penses really been incurred?
During the 1990s, the stock prices of dot-com com-
panies boomed. Many dot-com companies earned most
of their revenue from selling advertising
space on their websites. To boost re-
ported revenue, some dot-coms began
swapping website ad space. Company
A would put an ad for its website on company B’s web-
site, and company B would put an ad for its website on
company A’s website. No money ever changed hands,
but each company recorded revenue (for the value of
the space that it gave up on its site). This practice did
little to boost net income and resulted in no additional
cash flow—but it did boost reported revenue. Regula-
tors eventually put an end to the practice.
Another type of transgression results from compa-
nies recording revenue or expenses in the wrong year.
In fact, shifting revenues and expenses is one of the
most common abuses of financial accounting. Xerox
admitted reporting billions of dollars of lease revenue
in periods earlier than it should h ...
The document discusses how to prepare trading, profit and loss, and balance sheet statements. It provides steps for preparing trading and profit and loss accounts, including debiting opening stock, purchases, and expenses to trading and crediting sales and closing stock, then transferring gross profit or loss. It explains balance sheets have asset and liability sides and different ordering approaches. Assets are classified as fixed, current, tangible, intangible, and liabilities as long-term and current.
The document provides solutions to exercises for an accounting study guide. It includes solutions for exercises on defining accounting and its main functions, the difference between financial and management accounting, key financial statements (balance sheet, income statement, statement of cash flows), basic accounting principles, preparing balance sheets and income statements, double-entry accounting, recording transactions, and summarizing changes in financial position through journals and ledgers. Sample transactions are provided and journal entries are made to record the transactions.
This document provides an overview of topics covered in Accounting Day 2, including:
1. A review of debit and credit concepts through quizzes.
2. An introduction to key financial statements - the income statement reflects profitability, the balance sheet reflects financial position, and the cash flow statement shows cash inflows and outflows.
3. How transactions affect the income statement and balance sheet through accrual-based accounting adjustments.
The document then explores each financial statement in more detail, defining their purpose and key components like assets, liabilities, and equity for the balance sheet, and revenues and expenses for the income statement. Sample statements are provided for illustration.
The accounting cycle consists of 9 key steps: (1) analyzing transactions, (2) journalizing transactions, (3) posting to ledger accounts, (4) preparing a trial balance, (5) journalizing and posting adjusting entries, (6) preparing an adjusted trial balance, (7) preparing financial statements, (8) journalizing and posting closing entries, and (9) preparing a post-closing trial balance. The purpose of the accounting cycle is to ensure all financial activities of a business are recorded and reported accurately through a series of processes that track money coming in and going out. Errors can occur if transactions are incorrectly recorded or posted, leading to an unbalanced trial balance that requires adjustment.
Adjusting entries are journal entries made at the end of an accounting period to ensure revenues and expenses are recorded in the appropriate period. This involves adjusting accounts for accruals, such as unpaid expenses and unrecorded revenue, and deferrals like prepaid expenses and unearned revenue. An adjusted trial balance is prepared after adjusting entries to prove the equality of debit and credit balances before financial statements are made.
Accounting system intro and accounting system of reliance industriesShashank Kapoor
Accounting provides essential financial information to a company in 3 key ways:
1. It allows a company to systematically record, report, and analyze its financial transactions through the accounting process.
2. An accountant oversees the accounting process and ensures compliance with accounting principles and regulations.
3. By analyzing accounting data, a company can evaluate its financial performance through metrics like net profit and make informed business decisions.
The document summarizes key aspects of accounting information systems and the accounting cycle, including:
1) It explains the basic accounting equation and double-entry system of debit and credit entries.
2) It outlines the steps in the accounting cycle from journalizing transactions to preparing financial statements and closing entries.
3) It describes the purpose and preparation of adjusting and closing journal entries to update revenue, expenses and inventory accounts.
The document discusses the cash flow statement, which reports cash inflows and outflows during a period of time for operating, investing, and financing activities. It provides steps for preparing the cash flow statement, including classifying transactions, listing cash flows by activity, and calculating the net cash flow and ending cash balance.
Similar to How to Prepare Statement of Cash Flows in 6 Steps (20)
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Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
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OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
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Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
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2. Introduction
Many people also struggle with preparing IFRS
statement cash flows because…
It’s the only statement prepared on a cash
basis, not on an accrual basis;
Accounting records must be adjusted to
exclude non-cash items which might be quite
demanding.
3. Gather Basic Documents and Data
In order to start, you shall obtain at least the following
documents:
1.
Balance sheet (statement of financial position) as at the
end of the current reporting period (closing B/S) and as at
the beginning of the current reporting period (opening B/S)
Statement of changes in equity for the current reporting
period .
Information about material transactions in your company
during the current reporting period.
4. Calculate Changes in the Balance Sheet
Take the closing and opening B/S and make a simple table
with 3 columns: the first column – title of caption in B/S
(for example, tangible non-current assets).
The second column—balance of this caption from the
closing B/S and the third column—balance of this caption
from the opening B/S.
2.
5. Put Each Change in B/S 3.
You should have a blank statement of cash flows ready
for further work. Ideally, you can use the statement of
cash flows from previous period and take only titles of
individual captions.
You should look to all changes in your balance sheet
and enter each number to the blank form of cash flow
statement.
For example: You have calculated that change in your property,
plant and equipment is -10 000, so you enter this figure in the investing
part of your blank cash flows under the title “purchases of PPE”
6. Make Adjustments for Non-cash Items
Typical non-cash adjustments are usually as follows:
Depreciation Expense
Interest Income and Expense
Income Tax Expense
Expense for Recognition
4.
Change in Revaluation Reserves
Foreign Exchange Differences
at the end of period
Revaluation of certain assets
and liabilities at the end
of period
7. Make Adjustments for Non-cash Items
You find out that your company entered into new material
lease contract. And there is a non-cash adjustment hidden for
sure, because on one side, increase in PPE was recorded that
was not purchased for cash.
On the other hand, increase in loans or lease liabilities was
recorded, but the company have not received any cash. So
you shall adjust for it
5.
8. Prepare Movements in Material Balance Sheet 6.
You have made all material non-cash adjustments in your cash
flows without omitting something important. Well, if you are
sure that you have all available information from various
departments in your company to include, than fine. But if you
are unsure about it, then rather do this step.
It’s very easy. Just take the biggest or material items in your
balance sheet and reconcile their movements between opening
and closing balance. Check whether each movement is taken
into account for in your cash flow statement so far.