Term
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Definition
reports a firms major cash inflows and outflows for a period.
Provides useful information about a company's ability:
1) Generate cash from operations
2) maintain and expand operating capacity
3) Meet its financial obligations
4) Pay dividends |
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Term
Cash Flows from Operating Activities
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Definition
| Cash flows from transactions that affect net income |
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Term
| Cash Flows From Investing Activities |
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Definition
| Cash flows from transactions that affect investments in the noncurrent assets of the company |
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Term
| Cash Flows From Financing Activities |
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Definition
| Cash flows from transactions that affect the debt and equity of a company |
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Term
Direct Method of Accounting |
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Definition
Reports operating cash inflows(reciepts) and cash outflows (payments) as:
Cash Flows from Operating Activities
Cash recieved from Customers
Less: Cash payments for merchandise
Cash Payments for operating activities
Cash payments for interest
Cash payments for income taxes
Net Cash Flows from Operating activities |
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Term
| Indirect Method of Accounting |
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Definition
reports the operating cash flows by beginning with net income and adjusting it for revenues and expenses that do not involve the reciept or payment of cash
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Term
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Definition
| not reported on financial statements, because of misinterpretation of what it means |
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Term
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Definition
measures operating cash flow available for a company to use after purchasing property, plant and equipment necessary to maintain current productive capacity
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