BUS103 Study Guide

Unit 10: Statement of Cash Flows

10a. Describe the types of business transactions that are included in operating, investing, and financing activities

Inflows and outflows of cash are reported in three different sections of the statement of cash flows.

List the cash inflows and cash outflows for each of the following sections of the statement of cash flows: operating activities, investing activities, financing activities.

 

Cash Inflows

Cash Outflows

Operating Activities

    

Investing Activities

    

Financing Activities

    

You will find examples of the cash inflows and outflows included within each category in Information in the Statement of Cash Flows on pages 398-400.

 

10b. Describe the difference between the indirect and direct methods of preparing the statement of cash flows

There are two methods of preparing a statement of cash flows: direct and indirect. The investing and financing sections are unaffected by the method utilized but the operating activities section will vary depending on which method is used.

  1. How is the operating activities section prepared using the indirect method?
  2. How is the operating activities section prepared using the direct method?

Instructions for preparing the operating activities section of the statement of cash flows is found in Cash Flows from Operating Activities on pages 400-404.

 

Unit 10 Vocabulary

Be sure you understand these terms as you study for the final exam. Try to think of the reason why each term is included.

  • Financing activities
  • Investing activities
  • Operating activities
  • Working capital