Correction Impact on cash or profit PDF

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Summary

Correction Impact on cash or profit...

Description

Exercise - Cash flow impact of transactions Type of transaction

Impact on cash

Impact on profit

Operating activities Sales of goods and services for cash

+

+

Sales of goods and services on credit

0

+

Collection of accounts receivable

+

0

Recognize cost of goods sold

0

-

Purchase inventory for cash

-

0

Purchase inventory on credit

0

0

Pay accounts payable

-

0

Accrue operating expenses

0

-

Pay operating expenses

-

0

Accrue taxes

0

-

Pay taxes

-

0

Accrue interest

0

-

Pay interest

-

0

Record depreciation or provision

0

-

Investing activities Purchase fixed assets for cash

-

0

Purchase fixed assets on credit

0

0

Sell fixed assets

+

0 + or -

Make a loan

-

0

Financing activities Increase long-term or short-term debt

+

0

Reduce long-term or short-term debt

-

0

Sell common or preferred shares

+

0

Repurchase and retire common or preferred shares

-

0

Pay dividends

-

0

Convert debt to common stock

0

0

Reclassify long-term debt to short term debt

0

0

+ means cash or profit is going up - means cash or profit is reducing 0 means that the transaction has no impact on cash or profit

Adapted from Horngren, Sundem and Elliot : Introduction to Financial Accounting, Prentice Hall, 2002...