Montclair State University

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Montclair State University

• Accounting 521
• Statement
• of Cash
• Flows

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Statement of Cash Flows
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Statement of Cash FlowsObjectives

• FASB Conceptual Framework
• Provide information useful in assessing future
  cash flows

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Cash Equivalents

• Contain restrictions or penalties on their
  conversion to cash
• Are nearly as liquid as cash
• Examples

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Cash Equivalents

• Contain restrictions or penalties on their
  conversion to cash
• Are nearly as liquid as cash
• Examples
• Money market savings certificates
• Certificates of deposit

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Basic Approach

• Assets Liabilities Stockholders Equity

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Basic Approach

• Cash Noncash Assets Liabilities
  Stockholders Equity

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Basic Approach

• Cash Noncash Assets Liabilities
  Stockholders Equity

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Basic Approach

• Cash Liabilities Stockholders Equity
• - Noncash Assets

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Basic Approach

• Cash Liabilities Stockholders Equity
• - Noncash Assets
• Cash Liabilities Stockholders Equity
  - Noncash Assets

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Basic Approach

• Cash Liabilities Stockholders Equity -
  Noncash Assets

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Basic Approach
Cash Liabilities Stockholders Equity -
Noncash Assets
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Basic Approach
Cash Liabilities Stockholders Equity -
Noncash Assets

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Basic Approach
Cash Liabilities Stockholders Equity -
Noncash Assets
- -
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Statement of Cash FlowsClassifications

• Operating Activities
• Financing Activities
• Investing Activities

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Statement of Cash FlowsOperating Activities

• Cash Inflows
• Receipts from sale of goods or services
• Returns on loans (interest)
• Returns on equity securities (dividends)

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Statement of Cash FlowsOperating Activities

• Cash Outflows
• Payments for inventory
• Payments to employees
• Payment of taxes
• Payments to suppliers for other expenses
• Payments of interest

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Statement of Cash FlowsInvesting Activities

• Cash Inflows
• Principal collections from loans
• Sale of loans made by the entity
• Sale of long-term debt or equity securities
• Sale of property, plant and equipment
• Sale of a business unit

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Statement of Cash FlowsInvesting Activities

• Cash Outflows
• Loans made
• Purchase of long-term debt or equity securities
• Purchase of property, plant, and equipment
• Purchase of a business
• Purchase loans from other entity

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Statement of Cash FlowsFinancing Activities

• Cash Inflows
• Proceed from issuing stock
• Proceeds from issuing debt (short-term or
  long-term)

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Statement of Cash FlowsFinancing Activities

• Cash Outflows
• Payment of dividends
• Repurchase of entitys own stock
• Repayment of debt principal (short-term or
  long-term)

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Statement of Cash Flows
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Statement of Cash Flows