Textbook Notes (368,123)
Canada (161,661)
Business (2,391)
BU397 (49)
Chapter 22

Chapter 22 Notes.docx

4 Pages
Unlock Document

Allan Foerster

Statement of Cash flows Usefulness - The info may help users assess o Liquidity and solvency  Entity’s ability to generate future cash flows and its needs for cash resources o The amounts, timing, and uncertainty of future cash flows o Reasons why net income and net cash flow from operating activities differ Cash and Cash equivalents - Cash o Cash on hand o Demand deposits - Cash equivalents o Investments that are  Short term  Highly liquid  Readily convertible to known amounts of cash  Subject to an insignificant risk of change value o Made up of non-equity investments that are acquired with short maturities  Less than 3 months The cash flow statement - Provides info about o Cash receipts (cash inflows) during the year o Uses of cash (cash outflows) during the year - Inflows and outflows are reported for o Operating activities o Investing activities o Financing activities o FV for the lessor = MLP x PV annuity DUE factor using the lease term and ROR as the discount rate + residual value x PV factor (because the residual value is at the end of the useful life) Cash flow classifications - Operating Activities o Cash flows resulting from the primary revenue producing activities in the business such as  Collections from customers  Payments to suppliers  Payments to employees  Payments to CRA for tax o Cash flow provided by operating activities necessary for long term sustainability of the business  To take advantage of new investment opportunities  To pay dividends without seeking external financing - Investing Activities o The acquisition and disposal of long term assets and long term investments o Includes  Purchase/disposal of capital assets  Tangible and intangible  Cash receipts from the disposal of assets mentioned above  Cash payments to acquire equity or debt instruments  Cash receipts from the disposal of equity or debt instruments o Cash flows generated by investing activities shows if the business is investing in additional long term assets that will generate profits and increase cash flows in the future - Financing Activities o Changes in long-term debt or equity capital o Including  Issuing debt or repayment of debt  Issuing new shares or repurchase or currently outstanding shares  Cash payments by a lessee for the reduction of the outstanding obligation related to a finance lease o Provides information to assess potential for future claims to entity’s cash, extent of debt and increased interest charges - Noncash transactions o Transactions that do not involve the direct receipt or disbursement of cash in the period  Assets acquired by assuming debt or issuing shares  Exchanges of no
More Less

Related notes for BU397

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.