,*,出版社 经管分社,会计英语,Chapter 9 Statement of Cash Flows,Learning Objectives,1.Explain what the statement of cash flows is.,2.Describe the base of the statement of cash flows.,3.Identify the classification of cash flows.,4.Determine cash flows from operating activities.,5.Determine cash flows from investing activities.,6.Determine cash flows from financing activities.,7.Prepare statement of cash flows.,1,9.1 A General Description of the Statement of Cash Flows,9.1.1 What Is the Statement of Cash Flows,The statement of cash flows on prepared in terms of cash shows the fluctuation of financial position of a business.,2,9.1.2 The Base of the Statement of Cash Flows,The base of the statement of cash flows is cash. The cash is defined to include both cash treasury, cash in bank, other cash and cash equivalents.,(1)Cash treasury: Cash treasury is the cash held by a business that can be paid at any time. ,(2)Cash in bank: The cash deposits in financial business that can be paid at any time.,3,(3)Other cash: The cash deposits at financial business that can be used in specific ways, for example: deposit in other places, cheque etc.,(4)Cash equivalents: The cash equivalents are short-term, highly liquid investments, which include money market accounts, commercial paper, and treasury bills etc.,4,9.1.3 Uses of the Statement of Cash Flows,The statement of cash flows provides information about a companys cash inflows, outflows and net flows during an accounting period. The information will help investor, creditors and other external users to assess the ability of company to generate future cash flows.,5,9.1.4 The Classification of Cash Flows,The cash flows are classified into three kinds: cash flows from operating activities, cash flows from investing activities and cash flows from financing activities. ,(1)Operating activities are all transactions and other events that are not investing and financing activities.,6,(2)Investing activities are the activities that acquire and sell of long-term assets and marketable securities other than cash equivalents, and the making and collecting of loans.,(3)Financing activities are the activities that lead to the change of scale and constitution of a businesss capital and liabilities.,7,9.1.5 Format of the Statement of Cash Flows,The general format of the statement of cash flows is shown as Exhibit 9.1. There are four sections in the statement: cash flows from operating activities, cash flows from investing activities, cash flows from financing activities, net increase or decreases in cash and other information.,8,9,10,9.2 How to Prepare the Statement of Cash Flows,The preparation of the statement of cash flows is different from the balance sheet and the income statement. The preparation of the statement of cash flows must use the information from comparative balance sheet, current income statement, and some accounts that can provide some additional detailed information, needed in determination of cash inflows or outflows.,11,Exhibit 9.2,12,Exhibit 9.3,13,9.2.1 Determine cash flows from operating activities,There are two methods of disclosing cash flows from operating activities: Direct method and Indirect method. Both methods produce the same result, but the forms of disclosure are not alike. We only illustrate Direct method here.,14,1)Cash Receipts from Selling Goods, and Rendering Services,Cash receipts from selling goods, and rendering services are the basic and most important item of cash inflows from operating activities.,2)Cash Payments to Suppliers,Purchases are the base and important item of cash outflows from operating activities. The figure of cash payments to suppliers should be calculated based on cost of goods sold.,15,3)Cash Payments to Employees ,The cash payments to employees can be calculated using the following equation: ,Cash Payments to Employees= Salary Expenses+ Decrease in Salary Payable (or-Increase in Salary Payable),16,4)Cash Payments for Income Taxes,The income tax expense in the income statement should be adjusted by the increase or decrease in income taxes payable.,Cash payments for Income Taxes=Income Taxes +Decrease in Income Taxes Payable (or-Increase in Income Taxes Payable),17,9.2.2 Determine cash flows from investing activities decision,After determining the cash flows from operating activities, the next step in preparation of statement of cash flows is determining cash flows from investing activities. ,18,9.2.3 Determine Cash Flows from Financing Activities,After determining the cash flows from operating and investing activities, the third step in preparation of the statement of cash flows is determining cash flows from financing activities. ,19,9.2.4 Prepare the Statement of Cash Flows,As a result of the above three steps, all the income statement items and balance sheet items, which had been changed during 2021, have been analyzed, and thus the amount of cash flows have been determined. Based on the above data, we can prepare the statement of cash flows.,20,21,22,23,