ACTG 3110 Chapter Notes - Chapter 5: Cash Flow Statement, Cash Flow, Income Tax
Document Summary
Cash flow prediction is primary objective of f/s. Objective cash flow statement to disclose historical cash flows for reporting period. Three sections: operating activities, financing activities. Bottom statement or in note reconcile change cash and cash equivalents. Less temporary bank overdraft include if fluctuate positive to negative on regular basis. Operating: changes in current assets / liabilities (unless in cash and cash equivalents, net earnings not comprehensive income. Financing: changes in non-current liabilities and owners equity. Indirect start with net income and adjust impact of accrual actg to cash basis: non-cash items e. g. amortization, gain or loss on sale asset, adjust changes in current assets and liabilities. Offsetting is the process of netting assets and liabilities that correlate with each other: accounts receivable and accounts payable between 2 parties. Gaap states offsetting should not occur in cfs. E. g. bond retirement by issuing new shares. Exclude these since no actual cash flows. Partial cash transactions: only cash part recorded in f/s.