Chapter 12 the Statement of Cash Flows

The cash account is a balance sheet account and is in the liquid funds accounts It is important for the system be able to discriminate between balance sheet accounts (real accounts) and income statement accounts (nominal accounts). This classification is important for closing purposes and also for developing the financial statements. The account classification (liquid funds) is also important for the system when developing the financial statements.

| (TCO D) The basis for classifying assets as current or noncurrent is conversion to cash within

The statement of cash flows explains the change during the period in cash and cash equivalents. Cash includes currency on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash (Flight. 2006). Because of this there are two recommendations for Tyva.

The cash flow (CFS) statement represenst revenue and expenses for a specific period of time (Sticker, 2012). . The CFS details exactly where cash is being derived and spent and may be generated at any time for analysis (Finkler, Jones, and Koyner, 2013).

The statement of cash flows breaks down the cash exchange of the long term debt for the past two years. Under the Financing Activities portion of the cash flows statement it shows the long term debt broken down intoproceeds from and repayment of bank loans. The calculations of the changes in the past two years are expressed below in thousands:

The statement of cash flows presents investing and financing activities so that even noncash transactions of an investing and financing nature are disclosed in the financial statements. If they affect financial conditions significantly, the FASB requires that they be disclosed in either a separate schedule at the bottom of the statement of cash flows or in a separate note or supplementary schedule to the financial statements.

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,127,654 $1,169,810

Note: To make the balance sheet balance, define cash as equal to (Current liabilities + Net worth) – (Accounts receivable + Inventory + Other current assets + Net fixed assets).

1.Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180.

Note 3 touches on the category of cash and cash equivalents. Some of the cash equivalents are "available for sale securities." These include agency obligations ($20 million), commercial paper ($87 million), corporate debt securities ($78 million), government treasury securities ($606 million) and certificates of deposit ($64 million). In addition, the balance sheet shows $1.1886 billion in cash. There are stated at fair market value, which if it cannot be determined on the open market is estimated. The company values auction rate securities using an internally-developed valuation model. The company also notes that some of the "available for sale" securities are longer-term in

      The Statement of Cash flows is a very useful financial statement that can benefit investors, managers and even auditors. The statement of cash flows has not been around as long as the other financial statements such as the balance sheet or income statement. It basically “illustrates the way accounting evolves to meet the requirements of users of financial statements.” (Marshall, 2003) The statement of cash flows is designed to provide important information about the cash that a company has received or has paid out during a certain time period. It provides a reason for the changes of cash received and paid by a company by taking into

| Below is an excerpt from the cash flow statement of a firm for fiscal year 2003: Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of software Tax benefits of employee stock plans Special charges (Gains)/losses on investments Change in operating assets and liabilities: Receivables Inventories Pension assets Other assets Accounts payable Pension liabilities Other liabilities Net cash provided by operating activities Cash flows from investing activities: Payments for plant and other property Proceeds from disposition of plant and other property Investment in software

Cash as in paper currency is the most liquid form of asset because it hold qualities such as, it is a medium of exchange, a unit of account, portable, durable, divisible and fungible (interchangeable) (Brunner, K and Meltzer, A. [1971]. The Uses of Money). I.e. a £10 note in my wallet is valued the same as a £10 in another person’s wallet.

The project proposal will be critical analysed before it will established in South Korea. In the first assignment will looked in depth in political, country risk, FDI theories and motive for the project. In the second assignment, the cost of capital for the project was calculated, stating the risk for both the parent and subsidiaries.

According to PAS 7, cash equivalents are short-term highly liquid investments that are readily convertible into cash so near their maturity that they present