Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

Which of the following correctly lists the three-step analysis to determine cash provided or used by financing activities on the statement of cash flows?

Calculate net income, adjust for non-cash expenses, and analyze changes in current assets and liabilities.

Identify cash receipts from customers, subtract cash payments to suppliers, and adjust for depreciation.

Classify cash flows as operating, investing, or financing, total each section, and reconcile to the ending cash balance.

Identify changes in financing account balances, determine the cash effect of each change, and explain the net cash provided or used by financing activities.

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Verified step by step guidance

Step 1: Understand the purpose of the financing activities section in the statement of cash flows. Financing activities involve transactions that affect long-term liabilities and equity, such as issuing debt, repaying debt, issuing stock, or paying dividends.

Step 2: Identify changes in financing account balances. Look at the comparative balance sheets to determine how accounts like long-term debt, common stock, and retained earnings have changed over the period.

Step 3: Determine the cash effect of each change. For example, if long-term debt increased, it likely indicates cash inflow from borrowing. If dividends were paid, it represents a cash outflow.

Step 4: Explain the net cash provided or used by financing activities. Sum up all cash inflows and outflows related to financing activities to determine the net effect on cash.

Step 5: Ensure the financing activities section reconciles with the overall change in cash on the statement of cash flows, alongside operating and investing activities.