ACFI1002 Lecture Notes - Lecture 8: Cash Flow Statement, Income Statement, Liquid Oxygen

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azuredonkey885

29 Jun 2018

School

University of Newcastle

Department

Accounting

Course

ACFI1002

Professor

Christine Yap

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The Cash Flow Statement: Topic 11

LO1: Describe purpose of cash flow statement.

Reports cash receipts and cash payments, showing where cash came from (receipts) and how it was

spent (payments). It is dated the same as the income statement (for the year or period ended

________) and explains why profit does not equal the change in cash balance. It includes all short-

term assets.

LO2: Report cash flows from operating, investing and financial

activities.

Operating activities: transactions that make up profit.

oPayments to suppliers and employees (CP)

oPayments of interest and income tax, and other operating payments (CP)

oCollections from customers and receipts of interest and dividends (CR)

Investing activities: relate to long-term asset accounts.

oAcquisition of non-current assets and purchase of investments (long term) (CR)

oMaking loans (CR)

oSale of non-current assets and investments (LT) (CP)

oReceipts on loans receivable (CP)

Financing activities: relate to non-current liability accounts and owners equity accounts.

oPayment of dividends and principal amounts on debts (CP)

oIssuing of shares and borrowing money (CR)

LO3: Differentiate between direct and indirect methods for reporting

cash flows.

There are 2 formats for reporting cash flows from operating activities: direct and indirect.

Direct: lists cash receipts from specific operating activities and payments for each major

operating activity.

Indirect: starts with profit and reconciles to cashflows from operating activities.

AASB 107, Cash Flow Statements, allows companies to use either method. If direct method is used,

disclosure in a note showing reconciliation of cash flows from operating activities to profit required.

LO4: Prepare cash flow statement by direct method.

Step 1: Identify activities that increased or decreased cash.

Step 2: Classify each cash increase or decrease as operating, investing or financing.

Operating listed first as this is most important source of cash for businesses. R then P.

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Document Summary

Reports cash receipts and cash payments, showing where cash came from (receipts) and how it was spent (payments). It is dated the same as the income statement (for the year or period ended. ________) and explains why profit does not equal the change in cash balance. Lo2: report cash flows from operating, investing and financial activities. Operating activities: transactions that make up profit: payments to suppliers and employees (cp, payments of interest and income tax, and other operating payments (cp, collections from customers and receipts of interest and dividends (cr) Investing activities: relate to long-term asset accounts: acquisition of non-current assets and purchase of investments (long term) (cr, making loans (cr, sale of non-current assets and investments (lt) (cp, receipts on loans receivable (cp) Financing activities: relate to non-current liability accounts and owners equity accounts: payment of dividends and principal amounts on debts (cp, issuing of shares and borrowing money (cr)

Related Questions

he accounting staff of Harris Company has assembled the followinginformation for the year ended December 31, 2011:


Cash sales	$	810,000
Credit sales		2,500,000
Collections on accounts receivable		2,205,000
Cash transferred from the money market fund to thegeneral bank account		250,000
Interest and dividends received		100,000
Purchases (all on account)		1,800,000
Payments on accounts payable to merchandisesuppliers		1,470,000
Cash payments for operating expenses		1,065,000
Interest paid		180,000
Income taxes paid		95,000
Loans made to borrowers		500,000
Collections on loans (excluding receipts ofinterest)		260,000
Cash paid to acquire plant assets		3,100,000
Book value of plant assets sold		650,300
Loss on sales of plant assets		80,400
Proceeds from issuing bonds payable		2,500,000
Dividends paid		120,000
Cash and cash equivalents, Jan. 1		489,000

Cashflows from operating activities:

Cashreceived fromcustomers ________________

Interestand dividendsreceived ________________

Cashprovided by operating activities _______________

Cashpaid to suppliers and employees ______________

Incometaxespaid ________________

Interestpaid ________________

Cashdisbursed for operating activities ______________

Netcash flow from operatingactivites ______________

Cashflows from investing activities:

Proceedsfrom sales of plantassets _______________

Loansmade toborrowers _______________

Collectionsonloans ________________

Cashpaid to acquire plantassets ________________

Netcash used in investingactivities: ________________

Cashflows from financing activites:

Dividendspaid _________________

Proceedsfrom issuing bonds payable ________________

Netcash provided by financing activites _______________

Netdecrease in cash and cash equivalents ____________

Cashand cash equivalents, beginning of year __________

Cashand cash equivalents, end of year _______________

Compute the amount of collections from customers

Cash reveived fromcustomers _________________

Compute the amount of cash paid to suppliers andemployees

Cash paid to suppliers and employees _______________

Compute the amount of proceeds from sales of plantassets

Proceeds from sales of plantassets _________________

Show your work

lavenderfly716

Lansing Companyâs 2015 income statement and selected balancesheet data (for current assets and current liabilities) at December31, 2014 and 2015, follow.

LANSING COMPANY Income Statement For Year Ended December 31, 2015
Sales revenue	$	62,200
Expenses
Cost of goods sold		21,000
Depreciation expense		4,500
Salaries expense		10,000
Rent expense		3,000
Insurance expense		1,700
Interest expense		1,800
Utilities expense		1,500

Net income	$	18,700

LANSING COMPANY Selected Balance Sheet Accounts
At December 31	2015		2014
Accounts receivable		$360		$371
Inventory		96		75
Accounts payable		123		130
Salaries payable		47		39
Utilities payable		13		10
Prepaid insurance		10		11
Prepaid rent		13		11

Required:

Prepare the cash flows from operating activities section only ofthe companyâs 2015 statement of cash flows using the directmethod. (Amounts to be deducted should be indicatedwith a minus sign.)

LANSING COMPANY
Cash Flows from OperatingActivitiesâDirect Method
For Year Ended December 31,2015
Cash flows from operatingactivities
Cash receipts from customers
Cash payments for rent
Cash payments for interest
Cash payments for utilities
Cash payments for insurance
Cash payments for salaries
Cash payments to suppliers

Net cash provided by operatingactivities	$0

PLEASE CALCUALATE EACH ACTIVITIES

indigolouse705

The balance sheet for Plasma Screens Corporation along with additional information, are provided below:

PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017
	2018		2017
Assets:
Current assets:
Cash	$	82,000	$	120,000
Accounts receivable		72,000		96,000
Inventory		65,000		80,000
Prepaid rent		5,000		4,000
Long-term assets:
Land		500,000		500,000
Equipment		800,000		600,000
Accumulated depreciation		(380,000)		(300,000)

Total assets	$	1,144,000	$	1,100,000

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	78,000	$	82,000
Interest payable		5,000		9,000
Income tax payable		9,000		7,000
Long-term liabilities:
Notes payable		75,000		150,000
Stockholders' equity:
Common stock		600,000		600,000
Retained earnings		377,000		252,000

Total liabilities and stockholders' equity	$	1,144,000	$	1,100,000

Additional Information for 2018:

1. Net income is $160,000.

2. The company purchases $200,000 in equipment.

3. Depreciation expense is $80,000.

4. The company repays $75,000 in notes payable.

5. The company declares and pays a cash dividend of $35,000.

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities:









Net cash flows from operating activities
Cash Flows from Investing Activities




Net cash flows from investing activities
Cash Flows from Financing Activities




Net cash flows from financing activities

Cash at the beginning of the period
Cash at the end of the period

coraldeer142

ACFI1002 Lecture Notes - Lecture 8: Cash Flow Statement, Income Statement, Liquid Oxygen

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