Premium Essay

Xacc 291

In: Business and Management

Submitted By kaiyah
Words 394
Pages 2
The term cash flows refer to the receipts and payment of cash. A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents is known as a statement of cash flow. Similar to an income statement, a cash flow statement records a company’s performance over a period of time. Consistently, companies will disclose the cash arising are generally required to prepare a statement of cash flow in their annual reports because it contains vital information for lenders and investors who primarily make informed and economic decisions about the companies. Generally during a company’s accounting period their cash flow is categorized and divided into three sections which are: cash flow from operations, financing and investing. The primary reasons these transactions are catergorized and divided is so investors will understand what the transactions are related to and how each section paints a vivid picture of how the company is doing from both a cash standpoint and overall health. The statement of cash flow is very important for companies that are required to prepare and present their financial statement in accordance to with international accounting standards and international financial reporting standards.

Cash flows from operating activities represent the cash collected from the primary revenue generating activities and will include all transactions from the operations of business. Operating activities are short term activities which only affect the current accounting period and are calculated by adjusting net income from the changes in current asset and liability accounts.

From investing activities, the cash flow consist of how much cash inflows and outflows from sale and purchases of long term assets. Another way to view this section is think of the company as investing in themselves. Investing cash flows are calculated…...

Similar Documents

Free Essay

Xacc Week 8 Assignment

...Internal Controls Ashly Rea XACC/280 September 22, 2012 Adrienne Cooper Internal Controls If you cannot trust your employees to protect your revenue, whom can you trust? In most cases the answer is not whether you can trust your employees but how effectively you are monitoring them. Internal control means doing just that, setting up methods and measures within an organization to establish control. Companies such as Tyco and Enron are examples of company destruction from a lack of internal control. With a strong internal control in place companies are able to protect their assets. This includes employees engaging in theft or robbery and takes care of any unauthorized use of any of the assets. Companies are also able to have reliable accounting financial records. Internal control helps to ensure accuracy in the work. In order for internal control to be functional there are specific control principles in place. Depending on the size and functions of the business, these principles can alter slightly. The majority of companies follow four internal control principles. These four principles are establishing responsibility, segregation of duties, using physical, mechanical, and electronic controls, and independent internal verification, It is impossible for one person to make sure all areas of the business are perfect. In order to be the most efficient, companies need to assign the responsibility to certain employees. It makes it easier and......

Words: 1046 - Pages: 5

Premium Essay

Acc/291

...Exercises and Problems - Week Two ACC/291 University of Phoenix E9-1 A. In this scenario, with the cost principle, the purchase cost for the factory asset will have all bills necessary to get the asset and make it ready for its particular objective. B. 1. Property 2. Plant Machines 3. Delivery Machines 4. Land Renovations 5. Delivery Machines 6. Plant Machines 7. Prepaid Insurance 8. License Expenditure E9-7 A. 1. 2011: $3,500 2012: $3,500 2. $0.28 per mile 2011: $4,200 2012: $3,360 3. 2011: $7,500 2012: $5,625 B. 1. Wear and tear Expenditure 3,500 3,500 2. Delivery Vehicle 30,000 Accumulated Wear and tear 3,500 $26,500 E9-12 Dec. 31 Amortization Expenditure: Patent 12,000 12,000 P9-7B A. Jan. 2 Patents 45,000 45,000 Jan. Research and Development June Expenditure 230,000 230,000 Sept. 1 Advertising Expenditure 125,000 125,000 Oct. 1 Copyright 200,000 200,000 B. Dec. 31 Amortization Expenditure: Patents 15,000 ...

Words: 271 - Pages: 2

Premium Essay

Xacc/280 Week 1

...Accounting Assumptions, Principles & Constraints Greg Young XACC/280 03/10/2013 Salena Ford Accounting assumptions provide a foundation for the accounting process. There are three major assumptions; the monetary unit, economic entity, and time period assumptions. The fourth assumption is the going concern assumption. The Monetary Unit Assumption makes it mandatory that only transaction data that can be expressed in terms of money be included in the accounting records. The reason for this is so that a company does not put a dollar value on something that cannot be expressed easily, such as the president of a company. The Economic Entity Assumption states that the activities of an entity be kept separate and distinct from the activities of the owner and of all other economic entities. An example of this would be the assumption that the activities of Budweiser are different from other breweries such as Coors or Guinness. The Time Period Assumption states that the economic life of a business can be divided into artificial time periods. This assumption is stating that companies are able to divide their activities in months or quarters for financial reporting purposes. The Going Concern Assumption assumes that a company will continue to operate long enough to complete their existing objectives. Accounting principles area basically a guideline on how to properly record and report economic events. The revenue recognition principle dictates that companies......

Words: 514 - Pages: 3

Premium Essay

Acc/291

...Thomas Individual Paper ACC/291 01/30/2013 My individual paper is going to focus on unethical accounting practices and how the Sarbanes-Oxley Act is used in today's world to try and limit companies from falsifying accounting statements. One way that companies use unethical practices would be a practice known as cooking the books, this would involve a company falsifying information on their financial statements. There are numerous reasons why a company would do this but the number one reason that they do it is because they are having financial issues with their company and they don't want to go under or fill for bankruptcy or they are just doing it for greed. One way that the government is trying to limit the use of such practices is passing Acts like the one U.S. Congress passed in 2002 called the Sarbanes-Oxley Act, this act mandated that there be stricter reforms on companies so that they can improve their financial disclosures, and preventing cooking the books and preventing accounting fraud. This Act was passed after all the early scandals in the late 1990's and early 2000's such as Enron. This act was named after their main architects, Senator Paul Sarbanes, and Representative Michael Oxley and it is used to deter and punish corporate and accounting fraud and corruption. The Sarbanes-Oxley Act has eleven titles, that all have to do with the company remaining in compliance with the Act. Another way that companies use unethical practices would be embezzlement,...

Words: 407 - Pages: 2

Premium Essay

Xacc/291 E13-8 E14-3

...XACC/291 – Week 8 Assignment Complete Exercises E13-8 & E14-3 Exercise E13-8 Taguchi Company Statement of Cash flows-Indirect method For the year ended in December 31,2011 Cash Flows from operating activities Net income 103,000 Adjustments to receive net income to net cash provided by operating cash activities: Increase in accounts receivable (9,000) Decrease in inventory 19,000 Decrease in accounts payable 8,000 18,000 Net cash provided by operating activities 121,000 Cash flows from investing activities Sale of land 25,000 Purchase of equipment 60,000 Net cash used by investing activities 85,000 Cash flows from financing activities Redemption of bonds (50,000) Sale of common stock 42,000 Payment of dividends 45,000 Net cash provided by financing activities 37,000 Net increase in cash 51,000 Cash at beginning of period 22,000 Cash at end of period 73,000 Non-cash investing and financing activities None to report Exercise E14-3 A. Horizontal Analysis Assets ...

Words: 280 - Pages: 2

Premium Essay

Xacc/291 Finals

...Berry’s Bug Blasters Liquidity Ratios 2008 Current ratio = Current assets/Current liabilities = 1,836,770.12/306,805.71 = 5.97 (4.09 2007) Acid-test ratio = (Cash + Accounts receivable + Short-term investments)/Current liabilities = (818,440.68 + 812,395.13 + 0)/306,805.71 = 5.32 (3.01 2007) Receivables turnover = Net credit sales/Average net receivables = can’t be calculated since company doesn’t sell goods (net sales not provided in financial statements) Inventory turnover = Cost of goods sold/average inventory = can’t be calculated since company doesn’t sell goods. Profitability Ratios 2008 Asset turnover = Net sales/Average assets = can’t be calculated since company doesn’t sell good (net sales not provided in financial statements) Profit margin = Net income/Net sales = can’t be calculated since company doesn’t sell goods (net sales not provided in financial statements) Return on assets = Net income/Average assets = 493,139.75/[(1,932,041.17 + 1,498,882)/2] = 28.7% (75.3% 2007) Return on common stockholders’ equity = Net income/Average common stockholders’ equity = 493,139.75/[(1,625,235.46 + 1,132,095.71)/2] = 35.8% (102.9% 2007) Solvency Ratios 2008 Debt to total assets = Total debt/Total assets = 306,805.71/1,932,041.17 = 15.9% (24.5% 2007) Times interest earned = Income before income taxes and interest expense/Interest expense = can’t be calculated since company hasn’t had income expense the last 2......

Words: 1350 - Pages: 6

Premium Essay

Xacc/291 Accounting

...l Chapter 4: Recognizing Differences Differentiate between valuation, depreciation, amortization, and depletion. Is it appropriate to calculate depreciation using two different methods? Why? Valuation can be defined as determining a value. Valuation involves assets should be documented at the current market price regardless of whether the actual value is above or below cost. There are two common valuation options which are fair-market-value and historical cost (net depreciation). The allocation of cost of a plant asset to expense over its useful or service life in a rational and systematic manner is known as depreciation. Depreciation is not a process of valuation, nor is it a process that results in an accumulation of cash. There are three methods that can be used for depreciation. Amortization is the systematic write-off of an intangible asset that has a useful life. This can be found on the income statement. The cost of intangible assets with indefinite lives is not amortized. Companies generally use the straight-line method for amortizing intangible assets. Depletion is the allocation of the cost of natural resources to expense in a rational and systematic manner and is only used for natural resources. A common type of natural resource is oil. Declining-balance method provides you the highest depreciation expense in the first year, because with this method there is a decreasing annual depreciation expense over the asset’s useful life. According to "Learn......

Words: 412 - Pages: 2

Premium Essay

Xacc 291 Week 2

...Week 2 CheckPoint Reflection During the useful life of a plant asset, a company may incur costs for ordinary repairs, additions, or improvements (Weygandt, Kimmel, & Kieso, 2010, p. 409). Costs incurred for ordinary repairs are considered revenue expenditures. Costs incurred for additions and improvements are considered capital expenditures. Companies incur revenue expenditures to maintain the operating efficiency and productive life of an asset. Usually these are fairly small costs that occur frequently. Examples of revenue expenditures are: Oil changes and tune-ups, maintenance charges, repair costs, renewal expenses, and repainting costs. Companies record the entry of revenue expenditures as a debit to Repair or Maintenance Expense as they are incurred, and a credit to cash or accounts payable (Weygandt, Kimmel, & Kieso, 2010). Companies incur capital expenditures to increase the operating efficiency, productive capacity, or useful life of an asset. Usually these are rather big costs that occur infrequently. Examples of capital expenditures are: Purchase costs, delivery costs, legal charges, installation costs, replacement costs, construction costs, and demolition cost. Companies generally record the entry of a capital expenditure as a debit to the Plant Asset affected, and a credit to cash or accounts payable. Land Improvements, Building, and Equipment all depreciate over the useful life of the asset; land is the exception and it does not depreciate. To review;......

Words: 303 - Pages: 2

Premium Essay

Xacc 291 Week 2

...August 10, 2014 XACC 291 Assignment 2 E9-1 1 A. The acquisition cost for the plant asset will contain all spending needed to obtain the asset and make it prepared for its own purpose. 1B. 1. Land 2. Factory Machinery 3. Delivery Equipment 4. Land Improvement 5. Delivery Equipment 6. Factory Machinery 7. Prepaid Insurance 8. License Expense E9-7 A. 1. Straight Line Method 2011: $3,500 2012:$ 3,500 Accumulated Depreciation 2011: $26,500.00 2012: $23,000.00 2. The Units of Activity Method $0.28 per mile 2011 $4,200 2012. 360 3. The double-declining method 2011: $7,500 2012:$5, 625 B. 1. Dec 31 Depression Expense 3,500 Accumulated Depression 3,500 (To record the annual depression on truck) 2. Brainiac Company December 31, 2011 Balance Sheet Equipment: $30,000 Less Accumulated Depreciation: $3,500 Net property, plant, and equipment: $26,500.00 E9-12 Adjusting Entry Dec.31 Amortization Expense: Patent 12,000 Patients 12,000 Problem 9-7B A. Jan.2 ......

Words: 306 - Pages: 2

Premium Essay

Xacc/290 Week 7

...Cost of Goods XACC/290 Cost of Goods The cost of goods sold is a category of expense for merchandising organizations. It is defined as the total amount of merchandise sold during an accounting period (Kimmel, Weygandt, & Kieso, 2011). To calculate the cost of goods sold, it would depend on which type of system the merchandising company is using. If they are using a perpetual system, which means that the organization uses daily detailed entries for the cost of their inventory’s purchase and sale, they would be journalizing each selling price of merchandise (Kimmel, Weygandt, & Kieso, 2011). For example, for inventory sold, an accountant would debit Accounts Receivable or Cash and Sales Revenue is credited for that merchandise’s selling total price (Kimmel, Weygandt, & Kieso, 2011). Subsequently, the accountant would also debit the Cost of Goods Sold and credit Inventory for the cost of that merchandise sold. The second system that can be used by a merchandising company would be the periodic system. In a periodic system, the organization does not keep a daily, detailed inventory record. They instead calculate the cost of goods sold at the end of their accounting period. To determine the cost of goods sold they use the equation – beginning inventory plus the cost of goods equals the cost of goods available for sale (Kimmel, Weygandt, & Kieso, 2011). They then take this total and minus it from their ending inventory. This will give the......

Words: 319 - Pages: 2

Premium Essay

Xacc-291 Reflection

...XACC-291-Week 2- Reflection Rukaiyah Williams XACC-291 06/28/15 Professor Jana Rideout XACC-291-Week 2- Reflection Small and larger companies daily incur revenue expenditures to upkeep their operating efficiency and productive life of an asset. Expenditures are unavoidable as well as they are very necessary to expand the business. Expenditures are payments of cash or cash equivalent for goods or services. The difference between revenue and capital expenditures is that revenue expenditures are expenses that are immediately charged against revenue as expenses. Regular and periodic repairs are revenue expenditures because they are charged directly to specific accounts. Examples of these accounts would be Repairs and Maintenance Expense. Capital expenditures are expenditures will increase the company’s investment primarily in productive facility. A capital expenditure is an amount spent to attain or improve a long term asset such as buildings or equipment. When recording capital expenditure, it is usually recorded in accounts classified or titled as Property, Plant and Equipment. Generally, because capital expenditures provide income for the company over a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred. Revenue expenses typically are shorter term expenses because they always required to meet the ongoing operational costs of running a business. (Investopedia, 2015) The contrasting factor of capital......

Words: 447 - Pages: 2

Premium Essay

Xacc/291 Week 4

...Recognizing Differences 6-14-2015 EXCC/291 Nicole L Smith Valuation refers to determining a value for something. For accounting purposes, two common valuation options are fair market value and historical cost (net depreciation). Depreciation is an adjustment to the net income of an entity for wear and tear of fixed assets. The adjustment for depreciation is (in theory) to expense assets over the term of their useful lives. Amortization is an adjustment to the net income of an entity to expense costs of intangible assets over the estimated useful life of the asset (example: writing off the costs of a noncompete agreement over the life of the agreement). Depletion is an adjustment to the net income of an entity to record the use or harvesting of its petroleum, minerals, timber, or other reserves. Accumulated depreciation, accumulated amortization, and accumulated depletion accounts are kept as contra accounts to the historical acquisition price of fixed (tangible) assets being depreciated, intangible assets being amortized, and reserves being depleted. In accounting the terms depreciation, depletion and amortization often involve the movement of costs from the balance sheet to the income statement in a systematic and logical manner. Depreciation, depletion and amortization are also described as noncash expenses, since there is no cash outlay in the years that the expense is reported on the income statement. As a result, these expenses......

Words: 369 - Pages: 2

Premium Essay

Xacc-291 Week 6

...Chen, Inc. purchases 1,000 shares of its own previously issued $5 per common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders' equity? Treasury stocks are repurchased or buybacks from stockholders that may have never been publicly issued. Treasury stock share do not pay dividends nor do they have voting rights. Whenever a company purchases treasury stocks, the assets are decreased because the cash or other assets are essentially swapped out for the treasury stock. Although the corporation can increase their return on equity by purchasing its own stock, their net income will not change. The paid in capital is reduced and shown in the balance sheet. (a) No effect nor change in net income (b) Total assets will be decreased by $12,000.00 (c) Treasury stock reduces retained earning, therefore there will be no effect nor change on total paid in capital (d) The total stock holder’s equity will decrease by $12,000.00 The treasury stock purchased in the above question was resold by Chen, Inc. for $15,000. What effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders' equity? In this example, the assets and equity will decrease because of purchasing from the common stock, however the total paid in capital will not be affected. The paid in capital......

Words: 310 - Pages: 2

Premium Essay

Xacc/280

...Checkpoint Accounting Assumptions Principles, And Constraints Diana Michalak XACC/280 Sara Carpenter August 5, 2011 The basic assumptions of accounting consist of four assumptions. Monetary Unit Assumption, which states that “only transaction data that can be expressed in terms of money be included in the accounting records(Ch 7.).” Economic Entity Assumption, which states that “the activities of the entity be kept separate and distinct from the activities of the owner and of all other economic entities. (Ch 7)” The Time Period Assumption which is an assumption that “the economic life of a business can be divided into artificial time periods (Ch 7).” The Going Concern Assumption which states that “the company will continue in operation long enough to carry out it’s existing objectives (Ch 7.).” The Principles of accounting consist of 4 principles. The first principal is The Revenue Recognitions Principle. This principle “dedicates that companies should recognize revenue in the accounting period which it is earned (Ch 7).” The second one is The Matching Principle which dedicates “that companies match expenses with revenues in the period in which efforts are made to generate revenues (Ch 7).” The third is the Full Discloser Principle which requires that companies disclose certain circumstances and events that make a difference to financial statement users (Ch 7).” The fourth one is the Cost Principle which “dedicates that companies record assets at their......

Words: 322 - Pages: 2

Premium Essay

Xacc/291 Week 3

...Capstone Response Nikki Pinkerton XACC/290 November 29, 2015 Dan Adams Capstone Response After reviewing Sarbanes-OXELY Act (SOX) which was established in 2002 we are able to see how this process affects the practice of accounting. SOX is designed to work with the internal controls that we have learned about this past week. Its main purpose is to ensure that auditors have no connection with the company they are auditing. No connection of any kind. Enron was one of the many companies committing fraud when the company was defunct and went bankrupt, this is why the SOX act was created. The requirements for under the SOX include statement of management’s responsibilities, allowing sufficient internal controls. This assessment is completed by management usually toward the end of the fiscal year. They will also the effectiveness of internal controls and procedures inside and outside. Sox ensures that all organizations are being checked and audited sparingly in order to aid in the consistency and accuracy of the information. Since this act was put in place in the year 2002 it has implanted stricter guidelines for organizations and is making the cover up of fraud much more difficult. Using external audits as the result of the SOX accounting scandals has come to an end. This process has ensured that all auditors have absolutely zero connection to the company that is being audited. I am sure they have to under go a very extensive back ground......

Words: 267 - Pages: 2