ACCY 206 Chapter Notes - Chapter 12: Cash Flow, Net Income, Income Statement
Document Summary
They thus enter into the determination of net income: most important because it shows the cash provided by company operations. Investing activities= include (a) cash transactions that involve the purchase or disposal of investments and property, plant, and equipment, and (b) lending money and collecting the loans. Involve cash flows resulting from changes in investments and long-term asset items: financing activities= include (a) obtaining cash from issuing debt and repaying the amounts borrowed, and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends. Prepare a statement of cash flows using the indirect method: companies prepare the statement of cash flows differently from the three other basic financial statements, first, it is not prepared from an adjusted trial balance. It requires detailed info concerning the changes in account balances that occurred between two points in time. An adjusted trial balance will not provide the necessary data: second, the statement of cash flows deals with cash receipts and payments.
