Introduction to the Statement of Cash Flows definitions Flashcards
Introduction to the Statement of Cash Flows definitions
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Statement of Cash Flows Financial report summarizing cash inflows and outflows over a period, showing how cash balance changes from start to end. Operating Activities Section focusing on cash flows from core business operations, involving current assets and current liabilities. Investing Activities Section detailing cash flows from transactions involving long-term assets, such as equipment purchases or sales. Financing Activities Section covering cash flows from interactions with investors and creditors, involving long-term liabilities and equity. Current Assets Resources expected to be converted to cash or used within one year, such as accounts receivable and inventory. Current Liabilities Obligations due within one year, including accounts payable and accrued expenses, impacting operating cash flows. Long-term Assets Resources with useful lives extending beyond one year, such as equipment, often involved in investing activities. Long-term Liabilities Debts or obligations not due within the next year, typically addressed in the financing section of the cash flow statement. Stockholders' Equity Owners' residual interest in company assets after liabilities, affected by financing activities like issuing stock or paying dividends. Net Income Total earnings calculated as revenues minus expenses, not always equal to cash generated during the period. Dividends Distributions of earnings to shareholders, requiring available cash and reflected in financing activities. Accrued Expenses Obligations for expenses incurred but not yet paid, classified as current liabilities in operating activities. Accounts Receivable Amounts owed by customers for sales made on credit, considered a current asset in operating activities. Accounts Payable Amounts owed to suppliers for goods or services received, classified as a current liability in operating activities. Predictive Value Ability of financial information to help forecast future cash flows and assess company performance.
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