Classify each of the following items as an inflow ( I) or an outflow ( O) of cash, or as neither ( N) (See attachment "Classifying inflow for items")
Classifying inflow and outflow of cash
Account payable -1,000
Note payable +500
Long-Term Debt -2,000
Fixed Asset +400
Account Receivable -700
Net Profits +600
Repurchase of stock +600
Cash dividends +800
Sales of stock +1000
Cash Flow Concept
Account Receive are collective
Assets with 5 yrs life is purchased
Depreciation is taken
Amortization of goodwill is taken
Sales of common stock
Retirement of outstanding bonds
Five insurance premium is paid for the next 3 yrs
Tutorial gives you the classifications and discusses how each transaction impacts the cash flow.
Cash flow statement purposes
The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of a company during a specific time period. The other financial statements do not provide any information related to the cash flows of the company. Thus, the Financial Accounting Standards Board requires that a Statement of Cash Flows be prepared and presented with the other financial statements.
There are three primary sections that comprise the Statement of Cash Flows. What are the three sections and explain what each is used for? Why is the Cash Flow Statement a cash-basis statement while the other three are Accrual based?
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