Receipt of interest from an investment in bonds_____________. Payment of dividends__________________. of merchandise for cash________________. Cash collected on an accounts receivable_________________. Paid an accounts payable_____________________. Converting bonds into common stock________________. Purchased equipment issuing a long-term note_____________. D. SIGNIFICANT NONCASH ACTIVITIES—Not all of a company’s significant activities involve cash. Examples of significant noncash activities are: Direct issuance of common stock to purchase assets. Conversion of bonds into common stock. Direct issuance of debt to purchase assets. Exchange of plant assets. NOT Significant financing and investing activities that do not affect cash are reported in the body of the SCF. Such activities are reported in either: separate schedule at the bottom a of the SCF or separate note or supplementary schedule in a to the financial statements. The reporting of these noncash activities in a separate schedule or the notes satisfies disclosure principle and materiality concept (see chapter 6 in the textbook). E. FORMAT OF THE STATEMENT OF CASH FLOWS The general format of the SCF is the 3 activities previously discussed operating, – investing, and financing plus the significant noncash investing and financing – OIF, IF activities. To help remember, use the acronym, I could just remember “O, FORMAT OF THE STATEMENT OF CASH the three sections of the SCF.” FLOWS to see the following sections: Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase (decrease in cash) Noncash investing and financing activities SAMPLE STATEMENT OF CASH FLOWS that: The individual inflows and outflows from investing, and financing always activities are reported separately so that the investing and financing activities of the enterprise will not be obscured. The operating section also the inflows and outflows separately. But the operating depends on the method used (Direct or Indirect) to prepare the statement as discussed later.
Receipt of interest from an investment in bonds_____________. Payment of dividends__________________. of merchandise for cash________________. Cash collected on an accounts receivable_________________. Paid an accounts payable_____________________. Converting bonds into common stock________________. Purchased equipment issuing a long-term note_____________. D. SIGNIFICANT NONCASH ACTIVITIES—Not all of a company’s significant activities involve cash. Examples of significant noncash activities are: Direct issuance of common stock to purchase assets. Conversion of bonds into common stock. Direct issuance of debt to purchase assets. Exchange of plant assets. Significant financing and investing activities that do not affect cash are NOT reported in the body of the SCF. Such activities are reported in either: a separate schedule at the bottom of the SCF or in a separate note or supplementary schedule to the financial statements. The reporting of these noncash activities in a separate schedule or the notes satisfies the disclosure principle and materiality concept (see chapter 6 in textbook). E. FORMAT OF THE STATEMENT OF CASH FLOWS The general format of the SCF is the 3 activities previously discussed – operating, investing, and financing – plus the significant noncash investing and financing activities. To help remember, use the acronym, OIF, “O, IF I could just remember the three sections of the SCF.” FORMAT OF THE STATEMENT OF CASH FLOWS to see the following sections: Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase (decrease in cash) Noncash investing and financing activities SAMPLE STATEMENT OF CASH FLOWS that: The individual inflows and outflows from investing, and financing activities are always reported separately so that the investing and financing activities of the enterprise will not be obscured. The operating section also the inflows and outflows separately. But the operating depends on the method used (Direct or Indirect) to prepare the statement as discussed later.
Chapter_14_Statement_of_Cash_Flows.docx