Accounting 2 – ACCT 122 – Program #216 – Intro to the Cash Flow Statement

Hello there, everybody, we are back. Let'' s take a consider that homework I had you do. I believe I had you do the Goodman handout, is that deal with? Go in advance and also show that if you would. I think I revealed the responses in course and/or for you online people. This might have remained in the back in your chosen answers. However have a look at those very first four, I'' ll relocate up the sheet here in a minute. Any type of inquiries regarding 1 via 4 on Goodman? Any person? Allow'' s have a look at the amortization
table. Now, Because due to the fact that ' s only just, this amortization table won ' t go to an absolutely no unamortized premium
first two years of a 8 year bond, is that right? 'take a look at that. If you ' re. off by a dollar or whatever, dollar or more, I ' m not also worried about it, alright, I assume. I asked you on this set to round to the nearest dollar, fine? Currently bear in mind on the examination I'am. going to provide you the amortization table however I ' m not gon na

inform you exactly how to compute what. enters there, okay.So these formulas won ' t be there,
all right? Alright, any kind of questions on. the very first web page of Goodman? No? Alright, well let ' s go to the second web page. Currently the second. web page is preparing passion repayments greatly based off what you did on the amortization.
table, right? I think it'' s less complicated to do that amortization table and also then to do your journal.
access from those. And also naturally, every journal entry needs to equilibrium, right? The debits have.
What kind of account is costs on bond payable? > >'It ' s an adjunct responsibility, really good.
Okay? And also you can see, I'' ll relocate it. Make.
sure you constantly pay real attention to what that day gets on the examination that I'' m asking. you'. Don ' t simply presume it ' s the last line or something like that. Yet with a costs
. on bond payable, given that it'' s a complement responsibility, we include it to the par worth to get the transportation.
value, correct? And also then obviously, this is the journal entrance to extinguisher when that.
thing grows. Alright? Inquiries on that particular? Okay let'' s proceed and also have a look, then,.
> > With any luck these are getting easier as you have more technique. Okay, there is the.
four of the Schrader handout. Okay, I won'' t reviewed that, you can review it right there. I did ask you to round to the local cent on this due to the fact that it'' s a two-year bond and. I intended to be able to show on the amortization table that, indeed,
that unamortized. premium does decrease to absolutely no which the carrying worth does go down to par, fine? There are the first 2, or the initial four answers.Okay I said below that the bonds are.
That means we take 1.03855 times the par worth of 40,000 to get the money profits? Alright, let'' s take an appearance at the amortization table. Currently, once again I had you go to the penny,.
if you'' re off by a buck or 2,'it ' s immaterial, all right? The last row, once again, given that.
this is just a two-year bond, this is the last period of the bond, this row right here,.
deal with? So this requires to be no. So again, the manner in which I think via this is, if I.
know I only have one duration left hereafter one shown, I recognize I have to amortize that.
full quantity of costs, all right? This is 1,000 and after that this is just the distinction between.
these two. That needs to go to absolutely no, this has to go to par value.Okay, so did

you men.
obtain that? Luke? >>> > Do you want us to require everything the method back.
to the bond passion expense as opposed to simply– >>> > Well you ' ve got ta pressure that whole row as well as.
the reason you have to compel that whole row is, take an appearance at it. You recognize you need to.
force this number, right? And you know that number'' s gon na be 1,000? You have.
> >. > > So, yeah, you have to kind of pressure all of these columns, alright? > > If you didn ' t, it ' d be incorrect as well as you might.
out and after that I just, on the unamortized costs, I just placed a no. That was the only point.
I changed. >>> > Yet if you do that … oh you just absolutely no below.
and after that made use of these 2 numbers? >>> > Yeah>>. > > You recognize, I truly most likely wouldn'' t on an examination, have … well, but look at that, look. at that. You still, if you use 394.08, if you lowered your balance of 394.35 of unamortized. costs by just 3.9408 you still have an equilibrium in your unamortized premium.
>>> > Yeah >>. > > You see what I ' m stating? This has to.
be absolutely no as well as your unamortized premium needs to be no when this is all said.So you truly

obtained ta pressure this, you obtained ta force this, which indicates you obtained ta pressure this, and also certainly.
Okay, cool? Okay, excellent.
Remember the journal entrances and also you require all your journal entrances to balance. Take an appearance at those.
for Schrader.Remember, you people

in your home, and also you people below, as well, you can constantly publish.
these out again and also see if you can do them, that'' s the ideal means to research for an examination, isn ' t. it? Okay, best way to research for a test. Alright. Okay, allow'' s move this up.
Okay, let me zoom. out a bit due to the fact that what I think I stated was I wished to, see just how it would certainly view. the December 31, 2014 equilibrium sheet, which was this journal entrance which related to.
which line on the amortization schedule, this set right below, right? Okay, so our transportation.
worth is 40,394.35, our costs is 394.35 as well as naturally our par is 40,000, alright? Constantly.
ensure what day am I asking on, so you go to the right line of the amortization schedule,.
fine? Alright, concerns on that? Anybody? Okay. Alright. Okay, going over to the computer.
genuine fast, I desired you to continue reading web page 568 about the meanings of these bonds, is that.
fix? This wasn'' t real challenging and after that I desired you to do Quick Research 14.8, is that.
fix? Okay, so allow'' s do that actual quick.I had to cover

up the solutions because I wrote.
in my book, okay? Alright, Quick Research 14.8. All they'' re asking is for us to go into the.
letter of the summary A via H that best fits each term or expression 1 through 8,.
It'' s simply matching, fine? Allow'' s go in advance and do this. > > C. > > C, it has varying maturation days for amounts owed, all right?
owed, so second is C. Number 3 is a safeguarded bond, what does that indicate?
>>> > >>H? > > H. There ' s a particular possession pledged as collateral,.
isn'' t there, fine? If you have a vehicle funding, that'' s an instance of a secured finance since. if you don ' t pay your vehicle loan, what are they gon na come do? >

>>> Take your cars and truck. > > They take your car, alright
? Number 3. is H. Number four, holder bond, which definition is that?
>>> >>> F > >'F, it ' s unregistered. Payment mosts likely to whoever.
has them, fine? Rate of interest settlement mosts likely to whoever has them, so 4 is F. Number.
five, exchangeable bond is what? >>> >
>>E. > > E, it can be converted or traded, probably for the issuer'' s supply. Not all.
bonds are like but exchangeable bonds are. Number six, bond indenture, what is number.
> >
>>D. > > D. It identifies the rights and the responsibilities of the company as well as the shareholders. It'' s kind.
finance documents, that'' s sort of like the bond indenture.You know, who is

supposed to what,. has the prices and also all
that kind of thing, days. Number seven, sinking bond fund, what. is that? > > G. > > G, preserves a >>different possession account from which shareholders are paid at maturation, all right? What that ' s kind of like is state you had a vehicle'loan that was payable over the next 4. years. What if you established a different bank account, you put cash in there and also you didn ' t. use that money for anything other than to settle that automobile finance, possibly you also had an. automated payment out of that account so you
can virtually fail to remember regarding the obligation and. the asset, couldn ' t you? That ' s like a sinking bond fund.Blake? > > A sinking fund bond. > > Sinking bond fund,

sinking>>fund bond, >>yeah,. thanks.
Okay, so number 7 is G. Number eight is bond. What is a bond?.
>>> >>> B > > It ' s B, it ' s unsecured, all right? It ' s backed. only by the company ' s good standing, alright? The responses for those are right there if.
That'' s pretty easy, isn ' t it? Okay one last.
point I intend to discuss in relation to bonds before we relocate on from this chapter.Let me.

return to the computer system. Do you remember when, well, let me return to an example, remember.
when I would certainly tell you the problem price resembled 103.546% of the same level or for bonds offered at.
A price cut, I provided you the issue cost as well as it was less than 100%? And remember.
how I stated wear'' t stress over just how I created that number? You keep in mind that? Well.
I desire to at the very least tell you just how we developed that number since I know it'' s been.
troubling you, all right? What we do is, how are bonds valued? Prior to we give the response below,.
come off that. When we did time worth of money.Do you remember that one bond, believe back to. that, well it wasn'' t a bond, that a person investment that paid$ 10,000. at the end of
the term. It also paid $400. per duration throughout the life of it, bear in mind that? As well as do you bear in mind.
exactly how we identified the here and now value of that $10,000. and afterwards we figured up the existing.
worth of that annuity of $400. and after that we included those 2 answers with each other, do you keep in mind.
that? Well that is the exact same method that we make use of on how a bond is priced, looking at.
this. What we do, the cost of the bond is determined, we take the here and now value of the.
expected future capital for the bond. This involves discounting or locating the existing.
worth of the future interest settlements and likewise discounting or discovering today worth.
of the future repayment of principal, the par value at the maturity, okay? Using the market.
interest rate, are you with me? To make sure that is how you identify the cost of those bonds,.
alright? Currently we utilized to invest time really doing this however I wear'' t actually do it anymore. Once again, we have a finite quantity of time.In 25 years of

audit consulting I'' ve never ever. once identified the cost of a bond, okay, yet it would certainly be more simply a time, value and also.
cash inquiry than anything, alright. But that'' s sort of the approach concerning exactly how we.
generated that, alright? We simply marked down and also found the here and now value of those future.
capital. So I at the very least wished to make you aware of that, alright? Any inquiries? Okay,.
we'' re preparing to begin Chapter 16 currently. Currently Phase 16 is the last chapter we have.
prior to we have another examination so we will certainly have at the very least three talks as well as possibly four lectures.
on Chapter 16 so simply put, we have 3 or four more lectures and afterwards the following test.
which will more than time, worth, money, Chapter 14, Phase 16, does that make sense? Just.
to give you sort of a concept where we are, alright? Okay, this Chapter 16 is over the.
declaration of capital, alright? It'' s over the declaration of capital, and you can come.

When your teacher introduced the standard, off of that.Do you bear in mind in Bookkeeping 1.
economic statements? Does anybody keep in mind the first monetary declaration that you prepare?
>>> > Earnings statement. >>> > The income declaration, as well as after that what'' s next? >>> Declaration of owner'' s equity. >>> Statement of proprietor'' s equity and afterwards the>>? > > Balance sheet >>. > > Balance sheet? And you prepare those.
in Accounting 1 as well as, I can remember mentioning, as well as then there'' s the fourth monetary declaration.
that'' s prepared together with these three yet we wear'' t prepare it'in
Accounting 1, it ' s. past the range of the class as well as I stated, it'' s the statement of capital, you ' ll learn.
how to prepare that at a future day. Keep in mind that when I claimed that? This is that future.
date, fine? I'' m gon na show you how to do the declaration of money flows.We don ' t teach. it in Accounting 1, commonly, since it'' s just a little way too much for all new Bookkeeping.
1 trainees to understand, they require to get their audit fundamentals below, or in control,.
prior to they can find out the money flow statement, alright? So we'' re gon na educate you how to do.
the capital statement. I like to show the money flow statement.It ' s one of my favorite. phases to show.
Now allow me ask you this before we go to it, does anyone maintain track. of your, on an individual basis or if you have a service, does any person track their. cash circulations? Like, you do, Luke? Like what do you maintain track of? > > I think generally simply all the expenses like grocery as well as gas. > > Groceries and gasoline, alright, does any person
>>else do that? Okay, you do that, Matt? > > Just track everything that>>can be found in, whatever that goes out.
>>> > Just how do you track it, do you make use of a– >>> > Excel Spread sheet
>>. > > You use Excel Spreadsheet? Okay, Luke, what do you make use of?
>>> > I use envelopes simply to have a total because account, I guess.
>>> > Oh, you make use of cash envelopes? >>> > Yeah>>. > > That ' s a great system.Till there'' s say goodbye to money in the envelope>? > > There ' s no more to spend, yeah. > > Yeah, my spouse and I have done that before,.
so, why do you monitor these things? Matt, Luke, anybody else who does? Why?
>>> > You understand where your money is going. >>> > You desire to recognize where your money is being.
Invested? What various other factors? What various other reasons do you do it? Why do you make use of the envelope.
system? >>> > I guess simply simplicity of mind recognizing that I.
am effectively allocating my sources. >>> > Okay, and understanding not to spend beyond your means on particular.
categories, right? And it possibly gives you a little piece of mind, because if you have.
An expense but you recognize that there'' s ample cash money in the envelope? That you have.
that, alright? Do you have any financial debts that you need to pay? Either one of you? Vehicle lendings.
Okay.Sometimes you desire to

understand if you ' re gon na have sufficient. Occasionally you need to understand if you'' re. And I ' m not sure if you guys are functioning a job right now however you.
need to know, type of, how much you'' re making as compared to last month or whatever, right? Okay, let'' s take an appearance at the slides now. The very same factors that an individual would.
keep an eye on their cash flows pertains to why a business would certainly monitor their money.
flows. They need to know, just how does a business obtain its cash money? Where does a firm invest.
its cash, where are we spending our cash? Is our cash money balance going up or is our cash money.
equilibrium decreasing, okay? How did we money our procedures? Do we have sufficient.
money to pay our obligations? When it comes close to pay that, maybe believe concerning the bonds.
principal off, you'' d better have adequate cash to do that, right, sufficient cash money, fix? Can.
we manage to make some reward repayments? Can we afford to pay back some fundings or do.
we even require to get an additional loan, right? These are all the concerns that a company would certainly.
ask, or at the very least a few of the concerns that a business would ask, is that correct? Okay? Now let'' s come off that for a second.Let me ask you this, what system of audit. did we use when we prepared the earnings statement and also the balance sheet and also statement of proprietor ' s. equity? What system of accounting did we utilize? > > Double entrance? >>> > Well, yes, dual entrance however it'' s starts with an A. We made use of not the cash method yet.
the very first two letters are An and also C, the following letter'' s a C, so there ' s an R. The amassing. method! Yes, we utilized the amassing technique of accounting.
Remember the accrual method of. accountancy? Is that'sounding bells now? Bear in mind, that ' s why we prepare journal access? When, since we want to comply with the income recognition law that specifies we recognize income.
it is earned.When is earnings made? Does any person keep in mind? When you gave the product. to the service.
Not necessarily when you obtain cash money, keep in mind? Remember we acknowledge expenses. when they are incurred.
This is the matching principal. Is this sounding some bells? Okay. What you will certainly learn is, and also I told you this in Accounting 1, is we make use of the amassing. basis of accounting as well as the reason is due to the fact that if you use the cash money basis of accounting.Now. the cash basis of accounting claims, “Hey, whenever you get the money is when you videotape the income. Whenever you pay out the cash is when you tape-record the expense.” You see what I ' m saying? Yet that is extremely easy to adjust since I'could, like, improve up my lower line by. telling my people, “Hey, at the end of December, do not
pay any bills. Pay ' em all in January. Due to the fact that I don ' t desire my expenses to be 'identified up until January? Or'you might even inform. your clients, “Hey, will you do me a support? Pay me ahead of time for product and services. that I ' ll offer following year yet get me
the cash money in December so I can record it as income. Now you see how simple it would be to adjust a bottom line with with a money flow basis? Okay.So that is why, on the equilibrium sheet, the statement of equity and the earnings declaration,. that is why we utilize the accrual basis of bookkeeping, alright? Nevertheless, how does the capital statement. entered into play here? Well, let me ask you this.
Have you ever before checked out a story about an. professional athlete or a flick star or possibly you even know someone as well as they are declaring personal bankruptcy. and also they, you know they ' ve made a lots of cash as well as now they'' re stating personal bankruptcy? And also. you'' re like wait, that individual made millions as well as millions of dollars each year. They lived. in a massive home, they drove the best autos, they had fantastic holidays. Exactly how worldwide. did they proclaim insolvency? Can anyone consider any instances of real-life individuals? Any type of athletes? Anybody? > > M.C. Hammer. > > M.C. Hammer is the one from my generation.Do you know who M.C. Hammer is>>? He was exceptionally. preferred in, like, 1990 as well as he simply made millions and also countless bucks and after that he went absolutely. insolvent. What concerning athletes? There ' s a fantastic 30 For 30 documentary on ESPN called, I believe.
it ' s called, “Broke,” about professional athletes who go broke and the percents of athletes who,.
I indicate, there ' s simply tons of ' em, bunches of ' em. > > Overspending? Right here ' s the problem; a lot of time,.
As well as if you ask them to obtain$ 500.
me? This is a half a million dollar papa, mom as well as home both make, you know, $250,000. a year and also they can'' t– that ' s true, it happens at all times.Lots of a service that had a healthy and balanced
annual report and also a healthy income statement failed, and why did they go
I see your earnings statement.That ' s excellent. Okay, I additionally want to see– allow'' s reduced to the chase. You see what I ' m saying?
the 3 branches of the federal government from secondary school?
>>> > Executive, Legislative, Judicial. > > Yes, you have the Executive branch … you. Have the Executive branch, you have the Judicial branch, you have the Legal branch? One of the reasons that the owners of the country created that approach was to kind.
of be checks and balances on the various other, correct? Okay, well I desire you to sort of think of.
You have the income statement as well as currently we ' re. And what you ' ll discover. Well that'' s the.
wonderful, appropriate?” “Or an additional thing they'' ll try to do sometimes is these 2. They'' ll state,.” Hey, look at our revenue statement and also our statement of capital, guy those are pleasant. looking, aren ' t they?” Yet what they won ' t allow you see is the amount of financial obligation that they. have, okay? Now typically everyone always wishes to see the earnings declaration. They wish to.
see the revenue statement but a great deal of times they will try to hide the capital declaration.
or the annual report, alright? One thing that we figured out during the monetary situation of.
a couple of years back, here'' s basically what was happening in a nutshell. Financial institutions were expanding.
credit rating, giving car loans to businesses that remained in big trouble. They ought to never have actually been.
Business loan police officers, they desire to financing cash? They want to car loan money. They were looking at the earnings statement.
take an appearance at the annual report, alright? And also to be reasonable, sometimes they would certainly consider all.
three of these but … you can come off that, however anybody that understands economic statements.
should have recognized that something was up. I went in and did consulting for a business,.
I won'' t tell you that it was but the financial institution called us in since they'couldn ' t make their loan. payments any longer and we looked with their financial declarations and also we could just tell. by doing evaluation of these 3 statements that something was incorrect. Something was incorrect.
because there'' s no means this could be true and this be real as well as
this be real, okay? Make. sense? Let ' s state, Henry, that I took a look at your examination qualities in this class as well as allows claim. you averaged

an 87% on all your tests.And then allowed ' s say I checked out your test qualities.
as well as you averaged 95% on all your quizzes, alright? And afterwards I checked out your overall grade.
for the course and you had an F. Well something'' s incorrect here, right? Due to the fact that this course is rather.
much all tests and also examinations, is it not? How, and a sharp person would state, “” This doesn'' t. pan out,”? This doesn'' t appear to– something'' s wrong below. Something ' s incorrect here. A.
lot great deal the banking financial were not astute sharp or didn'' t take the time enough adequate take. a consider this. What we found out is, and this company went out of company, but this. business, this financial institution had in fact offered this firm one more$ 2,000,000 of cash money just eight. months before they called us in when points remained in trouble, so the financial institution lost millions.
of bucks. They had to create off the finance, all right? It is crucial that you recognize,.
you men are reaching the degree of accountancy currently where you begin to really utilize a few of.
this debit and also credit rating stuff.You need to

have the ability to examine those financial declarations,.
> > Well do you recognize what that suggests by creating it off? > > That ' s funny since'there ' s an
episode.” You simply compose it off,” “and Seinfeld states, “” You don'' t even understand what that indicates, do you?”.
off means this. Let'' s claim you owed me$ 5,000 and also you couldn'' t pay it and I maintained trying.
to accumulate it as well as ultimately you transferred to, you understand, Russia. Well I'' m never ever gon na obtain that.
cash that you owe me, am I? Well after that I need to eventually create that off my books.I can ' t.

show that as a $5,000 balance due from Daniel. Well for this financial institution, when they wrote.
it off, when you have a 2 plus million buck finance, a receivable from a company that can'' t. make their funding settlements and afterwards they declare bankruptcy, do you think you'' re gon na accumulate. your$ 2 million plus? So ultimately you need to compose that off guides, you have to obtain.
it off the publications. So you reduce that receivable as well as you hit an expense or in a loss account.
and it eliminates your income statement.Not pleased times

, not delighted times. Consider how delighted.
you'' d be if a company owed you $2,000,000 and also they weren'' t gon na pay and also just how crazy you'' d. be if one of your industrial loan policemans didn'' t do their correct research and also know just how.
to assess financial statements to know that that company was not healthy and balanced and also they should.
not have actually had money lent to them. See what I'' m saying? Okay. Alright, concerns? Okay,.
I desire to show you something real quick on the file camera. You don'' t have to transform. to this however in the back of your publication is an example of a real-life business and their balance.
sheet, fine? Take a look at that leading line, this is for Polaris Industries, this is their balance.
sheet. Current properties, the initial line is it claims “Money and cash money equivalents” and after that.
it provides the amounts over there. Okay, well what are these cash matchings? I intend to.
define that genuine fast. We understand when we'' re discussing cash, we ' re discussing money.
and also interest-bearing accounts and also all that sort of stuff but we'' re also including in there, in.

that line, cash money equivalents.What are money matchings? Money equivalents
are temporary,. really extremely liquid investments. An example would certainly be like a 90-day certification of deposit. They are really, really close to maturation, 90 days or less. They'' re conveniently exchangeable.
right into money and also you basically understand what they'' re mosting likely to be cashed in for since they ' re. so near maturation that their market price is not even influenced by the passion rate adjustments,.
fine? So this would certainly not include those Chapter 15 investments in stock, financial investment in bonds.
and also those kind of things. Would not consist of those. These would be like a 90-day certification.
of deposit or a 30-day CD or something like that. But those are what cash equivalents.
are, they'' re so close to cash that we placed them on the exact same line as cash money on the balance.
sheet, okay? Currently, the declaration of money flow has 3 areas. They have the Operating.
area where they put their operating activities, the Spending section where they place their.
spending tasks and also the Financing area where they put their funding tasks. Allow me show you an example of a cash money flow statement.This is a make believe company. this section right here, you can
see, is their Operating area. It shows the capital. from running tasks as well as the web money given by operating activities. This following. section is your Investing section. It ' s the capital from'spending activities, and. then it reveals the internet money in regards to investing activities. And after that this last area is.
the capital or it is the Financing area. It shows the capital from financing tasks.
and at some point the cash in concerns to funding activities, alright? What you do is you.
add these three numbers up, your net capital from running, financing as well as investing.
Now if that'' s a positive number,'it ' s an
increase. If it ' s a negative number', it ' s a decline in money.
transforming cash money to your beginning equilibrium as well as you obtain your finishing balance. And of program,.
these numbers you would draw off of where? The annual report, fix? Currently having a look.
at this, this number is a positive number, the 141.

If the subtotal is a positive number,.
it'' s called web cash money given by whatever task it is, all right? Now these are unfavorable.
numbers here, right? Adverse 45,000 and adverse 55,000. If that'' s an adverse number then we
. call that internet cash money used by. Internet cash money utilized by if it'' s an adverse number in concerns to.
whatever area you'' re in, correct? Now below is the essential deal.You need to be able. to evaluate a money flow and know what section of the capital declaration it belongs to,.
alright? Come off that momentarily. When you discovered how to prepare an equilibrium, believe around.
Let'' s state you didn ' t recognize whether a certain account went in the possession area. You understood it went on the balance sheet.
you didn'' t recognize if it entered the responsibility, the property or the equity section.
You ' re not. going to be able to prepare an equilibrium sheet, are you? Or a minimum of one that ' s purposeful. As well as dependable for readers? You need to know what area of the annual report.
In that circumstance is? Well, going back to this capital declaration, it'' s not nearly enough.
to recognize that some type of capital or activity goes on the capital declaration, you need.
to know what section it enters. Does it enter the operating section, the investing section.
or the financing section? You with me? So our first order of service here, folks, is.
we require to find out, you can come off that, we need to be able to categorize our cash circulations. We need to be able to classify our cash money flows.We need to

be able to take a look at a cash circulation.
as well as claim, “” Is this an operating activity or is this an investing activity or is this a.
financing task?”” Now my pupils tend … they have a tough time with this. I wear'' t recognize why, they just have a difficult time with it. I'' m gon na offer you some reminders. and also some devices that will assist you discover it but you require to learn this, fine? Let'' s talk. regarding these various activities.Going to the display, let'' s skip over operating as well as.
allow'' s actually move in the direction of the spending cash circulations. Investing capital, what are.
the three most typical investing capital? Well the three most typical investing cash.
circulations are purchasing or marketing long-term financial investments, that'' s Phase 15, right? Selling or buying.
fixed properties such as land, devices, building, automobiles, points like that. Or lending cash.
on or accumulating principal on a lasting note receivable, fine? If you look at, currently.
the audit formula, which is asset equals liabilities plus owner'' s equity, keep in mind. that? Every one of these things relate to lasting things on the left side of the audit formula,.
? Long-lasting investments are lasting properties. Set properties are long-lasting properties.
as well as, of training course, a long-lasting note receivable is a lasting asset. Does that make sense? So spending tasks need to correct here on that side of, with lasting things on the.
Currently allow'' s chat about the 3 most usual funding cash flows. Well, the 3 most typical funding cash flows are releasing lasting debt.
consisting of bonds which we found out about in Phase 14, or paying principal on that long-term.
Okay. Currently take a look at these funding money flows as well as take a look at the previous slide. Problem supply every currently and also after that yet a whole lot of times, it ' s simply as soon as?
Well, you most likely. recognize where I ' m going below but operating activities, there are the money moves that have a tendency to be the. reoccuring, recurring deals that take place in our company, in the procedures of our. organization, such as getting money from consumers, paying incomes and also incomes, acquiring stock,. paying suppliers, paying the taxes that we owe, okay? You see exactly how those things would. take place a whole lot a lot more in the everyday procedures? You with me? Now see the few of these that. remain in this group of Operating Cash Flows.Notice that if you get interest or if.
you pay interest, it is an operating activity.

That was why on these slides I underscored.
Currently, if you receive money rewards, it is an operating task. If you pay cash money.
returns, it ' s a funding task, alright? Now I ' ve provided you some guidelines on. discovering these, okay, yet you have to discover them.
I will tell you this takes place, you can. come off that, this occurs whenever
I educate this topic, is I will have a test over this. as well as I will certainly have a test over this as well as some individuals simply, this section where I ask. to classify capital, what I do is
I provide out capital and you ' ve reached tell me if. they ' re in operating, funding or investing. And also people just, oh, they do awful on this. I ' ve had people reduced their test grade score'by a fifty percent and also a grade even if it was. terrible and also I wear ' t mean to be so choosy on it but again, you'can ' t effectively prepare a. capital statement if you wear ' t understand how to categorize your cash money moves, are you with. me? So one point that I ' m gon na offer you … Jeremiah, do me a support, will ya? > > I didn ' t

do anything. > > Oh, yeah right.>Playing the duty of Jeremiah. >>will certainly be Michael. Can you hand one of those web pages to every person. Just stand at the end. of the aisle and pass it down, okay? I ' m giving you two pages. Allow ' s take a look'at the doc. cam', fine? I ' m providing you'2 web pages right here, folks, as well as see to it that you have both web pages.
Alright because they kind of appearance similar. This is the very first page where I give you some.
running tasks and after that the next page, I give you some funding and also some investing,.
fine? Now what I desire you to do is cut these out, okay, and after that on this line right below,.
just fold it, all right? So what you can do is you can make these little flash cards, like.
here'' s an example.Buy or offer a fixed asset. Well, what type of activity is that? That. is an investing activity, alright? So cut these out and also make little flash cards or just make use of.
these and also replicate it onto index cards but that is a great way to learn your capital. Currently.
below'' s what a great deal of people do, they get lazy and say, “” Well I put on'' t want to utilize scissors,”.
okay? “” I put on'' t intend to go back to Kindergarten and also use scissors so I'' ll just learn it off.
this sheet.”” Well all these operatings are provided with each other, all the investing are listed.
with each other and also all the financing are noted together.So they obtain this false sense of. safety and security that they understand what they ' re doing as well as they don'' t. However, if rather, you venture out. your scissors as well as you reduced these out and also you make flash cards like this one and also you blend.
them all up, that'' s how you find out, alright? That ' s how you find out these things. Currently I will tell.
ya, exactly how many people below are gon na take Managerial Audit? Okay, you'' re gon na need to recognize.
this again for Managerial Audit, alright, so whatever you do is gon na be twice as honored. We just have like three mins left yet we'' re gon na do something actual quick. I desire you,.
in your book, to do 16-2. Do this one right below and also come back soon.
( Songs) Okay, allow'' s review these actual fast. Number.
one, we'' re on Quick Study 16-2, right, currently 16-1, 16-2. Marketed lengthy as well as term investments.

>>> Operating. > > Operating, 3 is running. Bought stocks.
for cash, number 4? >>> > Operating>>. > > Operating. Number 5, paid cash rewards? >>> > Financing>>. > > Funding. Number 6, issued typical stock for cash money?
>>> > Financing >>. > > Funding. Number 7, obtained cash money interest.
on a note? >>> > Operating>>. > > Operating. Number 8, paid money passion on
>>a note? > > Operating, getting or paying rate of interest is always running. Number 9, received money.
> > Operating, all right.
Now you can keep that on there while I am chatting. Next, I desire you.
to learn these, I'' m not offering you any type of homework but you need to discover your money moves category. We are mosting likely to have a test following period that will be very, extremely similar to this Quick Study,.
okay? Make your flash cards. You folks in the house, I provided you those blink cards similar to this.
that you can– in your handouts, okay? So obtain those out of your handouts, you can make those,.
14 Connect task, fine? See you men.
Following duration is very important, bring your calculators. Bye bye.

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