Principles of Finance · free preview
The Statements of Owner's Equity and Cash Flows
The statement of owner's equity reconciles the equity section across a period, and the statement of cash flows reconciles accrual net income to actual cash through operating, investing, and financing sections that together explain the change in the cash balance.
1. The statement of owner's equity
The statement of owner's equity
2. Why the cash flow statement exists
Why the cash flow statement exists
3. Building the sections
Building the sections
4. Reading the cash flow story
Reading the cash flow story
5. The three equity movements
Through which three routes can owner's equity change over a period according to the statement of owner's equity?
6. Starting the operating section
Why does the operating section of the statement of cash flows begin with net income?
7. Adding back depreciation
Why is depreciation added back to net income in the operating section?
8. Growth in receivables
A firm's accounts receivable rose from 100,000 to 140,000 dollars during the year. How does this appear in the operating section of the cash flow statement?
9. Classifying the flows
Which trio correctly matches cash flow categories with their events?
10. The healthy mature signature
Which cash flow pattern most characterizes a healthy mature firm?
11. The reconciliation statement
What three-word term names the statement that reconciles the equity section from beginning to ending balance across a period? Answer in lowercase.
12. The noncash add-back
What one-word term names the noncash charge added back to net income in the operating section? Answer in lowercase.
13. The day-to-day section
What one-word term names the cash flow section covering the firm's daily business operations? Answer in lowercase.
14. The equity payout
What one-word term names the distribution of profit to shareholders that appears in both the statement of owner's equity and the financing section? Answer in lowercase.
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