Management and Organizational Studies 3361A/B Chapter Notes - Chapter 22: Financial Statement, Accrual, Operating Cash Flow

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3361A/B
• Professor: Michelle Loveland

Document Summary

Introduction to cash flows and the statement of cash flows. Classification of cash flows: three types of activities, operating activities (i. e. revenue-producing activities, investing activities (i. e. acquire or dispose of long-term investments, financing activities (i. e. changes in enterprises equity capital and borrowings) If material, they are reported as notes to the statement or in a supplementary schedule to the financial statements. Format of the statement of cash flows: two methods of preparing the operating cash flow section of the statement of cash. Indirect method: derives operating cash flows from accrual basis income statement. Direct method: determines operating cash flows directly for each operating source or use of cash, take revenue and expenses and ask how much cash, newer. The company is selling their land for cash. On the cash flow the land would be recorded under investing . On the income statement the gain would be recorded. The company paid for an investment in cash.