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CORPORATE FINANCIAL REPORTING

Cash Flow Statement

Long-Lived Assets

CASH FLOW STATEMENT

Operating activities xxxx

Investing activities xxxx

Financing activities xxxx

Increase (decrease) in cash xxxx

Cash, beginning of the year xxx

Cash, end of the year xxxx

2Cash Flow Statement

CASH FLOW STATEMENT

Operating activities normal day-to-day income producing activities (including buying/selling Trading Securities)

Investing activities acquiring/disposing of non-current assets (including buying/selling Securities Available For Sale) lending and being repaid the principle

Financing activities borrowing and repaying the principle amount borrowed all cash transactions with shareholders 3Cash Flow Statement

CASH FLOW STATEMENT

Companies don’t really prepare cash flow

statements like we did the first day of class.

They use, as much as possible, a logic based approach.

4Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under ASSET on a company’s balance sheet:

(in $ 000) 2010 2009

Land 10,000 4,000

and under LIABILITIES there were noliabilities for a land purchase.

What would you surmise happened?

5Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000)

2010 2009 Land 10,000 4,000

and under LIABILITIES there was: 2010 2009

Mortgage payable for land 5,000 -0-

What would you surmise happened?6Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000)

2010 2009 Land 10,000 24,000

and there is no loss from land impairment on the 2020 income statement.

What would you surmise happened?7Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000)

2010 2009Land 10,000 24,000Nothing about a receivable from sale of land.

And on the 2010 income statement you saw

Gain on land sale 5,000 -

What would you surmise happened?

8Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000)

2010 2009Land 10,000 24,000

And on the 2010 income statement you saw

Impairment of land (14,000) -

What would you surmise happened?

9Cash Flow Statement

CASH FLOW STATEMENT

Suppose you saw the following under OWNERS’ EQUITY on a company’s balance sheet: (in $ 000)

2010 2009 Capital stock 10,000 7,000 Paid in surplus 14,000 9,000

What would you surmise happened?

10Cash Flow Statement

CASH FLOW STATEMENT

For the most part, that is the approach companies take to

prepare cash flow statements.

11Cash Flow Statement

CASH FLOW STATEMENT

Warning!

Accounting professors love to put cash flow statement problems on

tests.

12Cash Flow Statement

CASH FLOW STATEMENT

QUESTIONS?

13Cash Flow Statement