Accounting 202- Final Exam / Accounting
202 Final Exam Study Guide | Financial &
Managerial Accounting Review
Statement of Cash Flows - ---✔✔✔ANSWER----Purpose is to record cash
receipts (inflows) and cash payments (outflows) during a period
Three Types of Cash Flow Activities - ---✔✔✔ANSWER----Operating,
Investing, Financing
Operating Activities - ---✔✔✔ANSWER-----include those transactions and
events that determine net income
-examples: the production and purchase of merchandise, the sale of goods and
services to customers, and the expenditures to administer the business.
-if a note results from sales to customers, its cash receipts are classified as an
operating activity, regardless of if it is short-term or long-term
, -GAAP requires that payments of interest expense be classified as an operating
activity
-this is a reconciliation when using the indirect method
A net cash inflow (source) occurs when... - ---✔✔✔ANSWER----the
receipts in a category exceed the payments
A net cash outflow (use) occurs when... - ---✔✔✔ANSWER----the
payments in a category exceed the receipts
Investing Activities - ---✔✔✔ANSWER-----generally include those
transactions and events that affect long-term assets, namely, the purchase and sale
of long-term assets.
-also includes 1) the purchase and sale of short-term investments in the securities
of other entities, other than cash equivalents and trading securities and 2) lending
and collecting money for notes receivable
Financing Activities - ---✔✔✔ANSWER-----include those transactions and
events that affect long-term liabilities and equity.
-examples are 1) obtaining cash from issuing debt debt and repaying the amounts
borrowed and 2) receiving cash from or distributing cash to owners
-involve the company's owners and creditors
Indirect method of reporting - ---✔✔✔ANSWER----reports net income and
then adjusts it for items necessary to obtain net cash provided or used by operating
activities
202 Final Exam Study Guide | Financial &
Managerial Accounting Review
Statement of Cash Flows - ---✔✔✔ANSWER----Purpose is to record cash
receipts (inflows) and cash payments (outflows) during a period
Three Types of Cash Flow Activities - ---✔✔✔ANSWER----Operating,
Investing, Financing
Operating Activities - ---✔✔✔ANSWER-----include those transactions and
events that determine net income
-examples: the production and purchase of merchandise, the sale of goods and
services to customers, and the expenditures to administer the business.
-if a note results from sales to customers, its cash receipts are classified as an
operating activity, regardless of if it is short-term or long-term
, -GAAP requires that payments of interest expense be classified as an operating
activity
-this is a reconciliation when using the indirect method
A net cash inflow (source) occurs when... - ---✔✔✔ANSWER----the
receipts in a category exceed the payments
A net cash outflow (use) occurs when... - ---✔✔✔ANSWER----the
payments in a category exceed the receipts
Investing Activities - ---✔✔✔ANSWER-----generally include those
transactions and events that affect long-term assets, namely, the purchase and sale
of long-term assets.
-also includes 1) the purchase and sale of short-term investments in the securities
of other entities, other than cash equivalents and trading securities and 2) lending
and collecting money for notes receivable
Financing Activities - ---✔✔✔ANSWER-----include those transactions and
events that affect long-term liabilities and equity.
-examples are 1) obtaining cash from issuing debt debt and repaying the amounts
borrowed and 2) receiving cash from or distributing cash to owners
-involve the company's owners and creditors
Indirect method of reporting - ---✔✔✔ANSWER----reports net income and
then adjusts it for items necessary to obtain net cash provided or used by operating
activities
