The document discusses income statements, cash flow, and the statement of cash flows. It defines income as earnings from operations, expenses as costs to earn income, and profit as income minus expenses. It explains that cash flow shows where cash came from and was spent, and the statement of cash flows categorizes these cash flows into operating, investing, and financing activities to evaluate a company's liquidity, solvency, and flexibility.

1. Income Statement and Flow of Cash Dr Nayyar R. Kazmi

2. Income Statement Sales – Expenses = Income

3. Income is the value of goods and services earned from the operation of the business. It includes both cash & credit. For example, if a business entity deals in garments. What it earns from the sale of garments, is its income. If somebody is rendering services, what he earned from rendering services is his income. Expenses are the resources and the efforts made to earn the income, translated in monetary terms. It includes both expenses, i.e., paid and to be paid (payable). Consider the above mentioned example, if any sum is spent in running the garments business effectively or in provision of services, is termed as expense. Profit is the excess of income over expenses in a specified accounting period. Profit= Income-expenses

8. ? Is King

9. Cash flow helps you better understand the Balance Sheet and the Income Statement Cash Flow is calculated from account values on those statements Cash is King A company must generate actual cash and it must generate it from its operations rather than through borrowing or by selling pieces of itself

10. Easy Come, Easy Go: Cash Flow Cash flow shows from where the company’s cash came from and where it was spent during the Accounting Period. Cash Flow Statement shows the increases and decreases in various accounts and the effects on the cash floor. Increase in Asset = Use of Cash Decrease in Asset = Source of Cash

11. Conversely Increase in Liability or Owners Equity=Source Decrease in Liability or Equity= Use of Cash Accounts for Non Cash Charges such as Depreciation, which is shown as an expense on the Income Statement, but since no actual expense is made it is taken as a “Source” of Cash.

12. Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities

13. The Statement of Cash Flows Three different activities: Operating, Content and Format Investing, Financing

14. The Statement of Cash Flows Content and Format Operating Cash inflows and outflows from operations. Investing Cash inflows and outflows from non-current assets. Financing Cash inflows and outflows from non-current liabilities and equity. The statement’s value is that it helps users evaluate liquidity, solvency, and financial flexibility.

16. The Statement of Cash Flows Preparation BE 5-12 Midwest Beverage Company reported the following items in the most recent year. Activity Operating Financing Operating Operating Investing Operating Financing Required: Prepare a Statement of Cash Flows

17. The Statement of Cash Flows Preparation Noncash credit to revenues. Noncash charge to expenses.