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16 Cards in this Set
- Front
- Back
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Chapter 14 |
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4 sources of cash |
1. Net INcome 2. Decrease in non cash assets 3. INcreases in liabilities 4. Increases in capital stock accounts |
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4 uses of cash |
1. Increases in non cash assets 2. decreases in liabilities 3. decreases in captial stock accounts 4. dividends paid to stock holders |
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3 sections of cash flows |
Operating Investing Financing |
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Operating activities affect |
DIrectly or indirectly effect net income 1. net income ( Gains= subtracted... losses = add) 2. Changes in noncurrent assets that affect net income ( depreciation and amortization) 3 changes in current liabilities that affect net income such as interest or debt 4 changes in noncurrent liabilities that affect net income such as interest and debt |
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investing activities affect |
consist of changes in non current assets that are not included in net income |
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financing activities |
consist of transactions involving borrowing from creditiors and transactions invovling the owner of the company and include.... 1. Changes in current liabilities that are debts to lenders rather than obligations to suppliers 2. changes in noncurrent liabilities that are not included in net income 3. changes in capital stock accounts 4. dividends paid to company shareholders |
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current assets |
operating |
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long term assets |
investing unless depreciation, amortization, gains and losses are all operating |
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current liabilities |
operating |
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long term liabilities |
financing |
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stockholders equity |
financing dividents financing operating if net income or loss |
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order of statement of cash flows |
1. Retained earnings Net income(loss) - O Dividends - F 2. other stockholder equity accounts - F 3. long term assets - I Dispositions Gains or losses - O Depreciation and amortization - O 4. Long term Liabilities - F 5. Current assets - O 6 Current Liabilities |
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direct exchange transactions |
when companies acquire assets or dispose of liabilities EX; issueing stock in excahnge for property and equipment or converting long term debt into common stock
NOTE. Exchanges that only affect noncurrent balance sheet accounts are not reported on the statement of cash flows but instead in a sperate schedule |
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Note |
For financing and investing you have to show each transaction whereas in operating you can show the net |
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Free cash flow equation |
Free flow = Net cash from operating - capital expenditures - dividends |
