AccountingBasics英语会计基础教学.pptx

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1、STATEMENT OF CASH FLOWS:USEFULNESS AND FORMATA statement of cash flows provides information about an entitys cash receipts and cash payments during a periodIt answers the questions:Where did the cash come from during the period?What was the cash used for during the period?What was the change in the

2、cash balance during the period?1LO1第1页/共44页Usefulness of the statement of cash flowsHelps investors,creditors and other interested parties to evaluate the following about the entity:Ability to generate future cash flowsAbility to pay dividends and meet obligationsReasons for difference between profi

3、t and net cash provided(used)by operating activitiesCash investing and financing transactions for the period2第2页/共44页Classification of cash flowsOperating activitiesCash effects of transactions that create income and expensesInvesting activitiesCash effects resulting from acquisition and disposal of

4、 long-term assetsFinancing activitiesCash effects resulting from long-term borrowing and shareholders equity3LO2第3页/共44页Operating activitiesAre transactions involving the acquisition or production of goods and services and the sale and distribution of these goods and services to customers.Current as

5、set and current liability transactions normally result from the operating activities of a company,such as buying and selling merchandise.4第4页/共44页The acquisition/disposal of long-term assets and other investments during a financial period.Examples include:Cash inflows fromCash outflows toSale of non

6、-current assets (PP&E,intangibles,share investments)Acquire non-current assets (PP&E,intangibles,share investments)Repayments of loans advanced to other partiesLend money to other partiesInvesting activities第5页/共44页 Transactions between a company and its owners or between a company and its long-term

7、 creditors.Examples include:Cash inflows fromCash outflows toIssuing shares and other equity instrumentsIssuing bonds and other borrowingsBuy back sharesRepay bonds and other borrowingsPay dividends(cash dividend)Financing activities第6页/共44页Significant non-cash activitiesSignificant financing and in

8、vesting activities that do not affect cash are not reported in the body of the statement of cash flows,but are disclosed elsewhere in the financial statement Examples include Issue of shares to purchase assetsConversion of bonds into sharesIssue of debt to purchase assetsExchanges of PPE assets7第7页/

9、共44页Format of the statement of cash flows8Cash flows from operating activities(List of individual items)xxNet cash from(used by)operating activitiesxxxCash flows from investing activities(List of individual inflows and outflows)xxNet cash from(used by)investing activitiesxxxCash flows from financing

10、 activities(List of individual inflows and outflows)xxNet cash from(used by)financing activitiesxxxNet increase(decrease)in cashxxxCash at beginning of periodxxxCash at end of periodxxxListed elsewhere in the financial statementMaterial non-cash investing and financing activities(List of individual

11、non-cash transactions)xxxCOMPANY NAMEStatement of Cash FlowsPeriod covered 第8页/共44页Preparing the statement of cash flowsThere are 3 sources of information to prepare the statement of cash flows:1 Comparative statements of financial position2 Current income statement3 Additional information(about tra

12、nsactions that occurred during the period)9第9页/共44页The following information has been provided on the following slides in relation to A Ltd for the year ending 30 June 2011:nStatement of comprehensive incomenStatement of financial positionnAdditional informationRequired:Prepare the statement of cash

13、 flows of A Ltd for the year ending 30 June 2011(using the direct method of disclosure for cash flows from operating activities)Preparing the statement of cash flows-Example第10页/共44页A Ltd Statement of Comprehensive Income for the year ending 30 June 2011Sales revenue520,000Interest revenue4,300Gain

14、on sale of plant&equipment2,500TOTAL REVENUE527,500Cost of goods sold276,300Depreciation plant&equipment38,500Other expenses135,000TOTAL EXPENSES450,500PROFIT BEFORE TAX77,000Income tax expense52,500PROFIT FOR THE YEAR24,500第11页/共44页A Ltd comparative Statements of Financial Position20102011Cash at b

15、ank152,0003,000Accounts receivable97,500180,000Inventory182,500305,500Prepayments8,0009,500Interest receivable1,0001,500Plant&equipment207,000300,000Accum.Depreciation PP&E(27,000)(55,500)Total assets621,000744,000第12页/共44页A Ltd comparative Statement of Financial Position20102011Bond payable120,0003

16、6,700Accounts payable36,20029,300Other payables3,0001,800Current tax liability43,50053,400Dividend payable20,00015,000Share capital250,000450,000Retained earnings148,300157,800Total liabilities&equity621,000744,000第13页/共44页Additional Information Plant&equipment that had originally cost$55,000 and ha

17、d been depreciated by$10,000 was sold during the year.During 2010-2011 A Ltd issued shares for cash.第14页/共44页Direct and indirect methodsOperating activities are reported using two methods:direct and indirectThe international accounting standard on cash flows allows entities to choose either methodIf

18、 an Australian entity chooses the direct method,a reconciliation of net cash flows from operating activities to profit must be disclosed in the notes to the financial statements15第15页/共44页161.The direct method cash inflows less cash outflows=net cash inflow/(outflow).2.The indirect method where the

19、accrual-based net profit is converted into cash amounts by adjusting for non-cash items and by analysing the movements in various accounts to establish the cash amount.Direct and indirect methods第16页/共44页STATEMENT OF CASH FLOWS DIRECT METHODThere are 3 steps in the preparation:1 Operating activities

20、Determine net cash provided/used by operating activities by converting from cash to accrual basis2 Investing and financing activitiesAnalyse changes in non-cash assets and liabilities3 Net change in cashCompare net change in cash in statement of cash flows with change on the statement of financial p

21、osition17LO3第17页/共44页Step 1:Operating activities18第18页/共44页Step 1:Operating activitiesCash receipts from customersSales revenue reflects sales made by the entity during the year irrespective of whether the customers have paid for the saleCash received in the current year includes sales made in the p

22、rior year that are not collected until the current year and excludes sales made in the current year where the cash will be received in a future yearTherefore the cash flows are determined with reference to the movement in Accounts Receivable 19第19页/共44页Step 1:Operating activitiesCash receipts from c

23、ustomersUse sales and comparative accounts receivable account balancesFormula to calculate cash receipts from customers:20Cash receipts Sales +Decrease in accounts receivable from =Revenue or customers Increase in account receivable第20页/共44页Step 1:Operating activitiesCash receipts from customers21Ac

24、counts Receivable Opening Balance Cash Receipts from Sales Revenue customers Closing BalanceCash receipts=Opening Balance+Sales Revenue -from customers Closing Balance第21页/共44页Step 1:Operating activities continuedCash payments to suppliersReflects payments made during the year for:Inventory purchase

25、sAll other supplies and services purchasedIncludes:Payments for prior year purchases Current year(pre)payments that will be expensed in future years Excludes:Current year purchases where the cash will be paid in a future yearExpenses recognised in the current year that were(pre)paid in prior years22

26、第22页/共44页Step 1:Operating activities continuedCash payments to suppliersUse cost of sales and comparative accounts payable and inventoryTwo steps:calculate amount of purchases made during period,then the amount of cash paid to suppliers for purchases23 Cash Cost of +Increase in inventory+Decrease in

27、payments =goods oraccounts payableto suppliers sold Decrease in inventory or Increase in accounts payable 第23页/共44页Inventory Opening Balance Cost of salesPurchases Closing BalanceStep 1:Operating activities continuedCash payments to suppliers24Accounts Payable Payment to Opening Balance Suppliers Pu

28、rchases Closing Balance第24页/共44页Step 1:Operating activities continuedCash payments for expensesUse various expense accounts and comparative prepaid expense accounts and accrued expense accountsTwo steps:calculate changes to prepaid expenses,then the amount of cash paid for expenses25 +Increase in pr

29、epaid +Decrease in Cash expenses accrued expenses payments for =Expenses orpayable expenses or Decrease in prepaid Increase in expenses accrued expenses payable 第25页/共44页Cash payments for expensesPrepaid Accounts Opening Balance Prepaid Expenses Cash Payment Closing BalanceStep 1:Operating activitie

30、s continued26Accrued Payable Opening Balance Cash Payment Accrued Expenses Closing Balance第26页/共44页Step 1:Operating activities continuedDepreciation expense and loss on sale of equipmentExpenses are shown exclusive of depreciation because it is a non-cash expenseLoss on sale of equipment reduces pro

31、fit,but does not reduce cash and is therefore is not reported on statement of cash flows27第27页/共44页Step 1:Operating activities continuedCash payments for income taxesUse income tax expense and comparative tax payable balances28 Cash +Decrease in income taxespayments for =Income tax payableIncome tax

32、es expense or Increase in income taxes payable第28页/共44页Step 1:Operating activitiesCash payments for income taxes29Income Tax Payable Cash Payment for Opening Balance Income tax Income Tax Expense Closing BalanceCash payment=Opening Balance+Income Tax for income taxes Expense-Closing Balance第29页/共44页

33、Step 2:Investing activities30This step involves analysing balance sheet data and income statement data and selected additional information for the effects of cashTransactions relating to non-current assets:property,plant and equipmentloans to other entitiesNon-cash transactions are not included第30页/

34、共44页Step 2:Investing activitiesIncrease in landIf ordinary shares are issued to purchase land,this will be significant non-cash transactionIncrease and decrease in equipmentUse depreciation expense,loss or gain on sale,and comparative equipment and accumulated depreciation accounts,plus additional i

35、nformationCheck comparative balances from balance sheet for amounts not accounted for31第31页/共44页Step 2:Investing activitiesIncrease and decrease in equipment32Equipment Opening Balance Cost of equipment Additional Purchase Sold Closing BalanceAccumulated Depreciation Opening Balance Sale of Equipmen

36、t Depreciation Expense Closing Balance第32页/共44页Step 2:Financing activitiesThis step involves analysing comparative balance sheet data and selected additional information for the effects of cashRelates to debt and equity of companyUse net profit and notes payable,issued shares and retained profit acc

37、ounts33第33页/共44页Step 2:Financing activitiesBonds payableCash inflow=cash received from issue of bondsCash outflow=cash paid upon payment of bondsCheck additional information for details(e.g.non-cash transactions that are not included in statement)34第34页/共44页Step 2:Financing activitiesIncrease in ord

38、inary sharesCheck additional information for detailsIf none,assume increase/decrease represents cash received/paidIf non-cash transaction,check that details account for changes to issued share balancesRetained earningsProfit not reported in statement of cash flowsDeclaration and payment of cash or s

39、hare dividend35第35页/共44页Step 3:Net change in cashCompare the net change in cash on the statement of cash flows with the change in the cash account reported on the statement of financial position to make sure they agree36第36页/共44页EXAMPLE SOLUTIONA Ltd statement of cash flow for the year ending 30 Jun

40、e 201137第37页/共44页A Ltd Statement of Cash Flows for the year ending 30 June 2011Cash flows from operating activitiesReceipts from customers437,500Cash payments:to suppliers406,200 for other expenses137,700 for income taxes42,600586,500Interest received3,800Net cash used by operating activities(145,20

41、0)Cash flows from investing activitiesPayments for plant&equipment148,000Proceeds on sale of plant&equipment47,500Net cash used by investing activities(100,500)Continued on following slide第38页/共44页A Ltd Statement of Cash Flow for the year ending 30 June 2011Cash flows from financing activitiesRepaym

42、ent of Bonds 83,300Proceeds from share issue200,000Dividends paid20,000Net cash flows from financing activities96,700Net decrease in cash(149,000)Cash at beginning of year152,000Cash at end of year3,000第39页/共44页STATEMENT OF CASH FLOWS INDIRECT METHOD40LO4第40页/共44页STATEMENT OF CASH FLOWS INDIRECT MET

43、HODUnder the indirect method profit/(loss)is adjusted for 1.non-cash items 2.the effects of accruals 3.items relating to investing or financing activities(non-operating items)The first two types of adjustments are identified by reviewing the statements of comprehensive incomeThe third type of adjust

44、ments are identified by identifying movement in statement of financial position accounts during the year for all balances that relate to operating activities41第41页/共44页42calculating operating activitiesAdjustments for current assets and current liabilitiesAdjustments to convert profit to net cash pr

45、ovided by operating activitiesCurrent assets and current liabilitiesAdd to profitDeduct from profitAccounts receivableDecreaseIncreaseInventoryDecreaseIncreasePrepaid expensesDecreaseIncreaseAccounts payableIncreaseDecreaseAccrued expenses payableIncreaseDecrease第42页/共44页43calculating operating acti

46、vities continuedAdjustments for non-cash items and cash flow items not classified as operating activitiesNon-cash chargesAdjustments to convert profit to net cash provided by operating activitiesDepreciation expenseAddPatent amortisation expenseAddLoss on sale of non-current assetsAddGain on sale of non-current assetsDeduct第43页/共44页44谢谢大家观赏！第44页/共44页