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Statement of Cash Flows - Direct Method May 2016

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Page 1: Statement of Cash Flows - Direct Method May 2016

STMT OF CASH FLOWS

DIRECT METHOD

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Page 2: Statement of Cash Flows - Direct Method May 2016

I n t h i s s e c t i o n w e w i l l c o v e r :uraccounted4accounting.com

Direct vs Indirect

Page 3: Statement of Cash Flows - Direct Method May 2016

I n t h i s s e c t i o n w e w i l l c o v e r :

Direct vs IndirectSales - A/R - Cash In

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Page 4: Statement of Cash Flows - Direct Method May 2016

I n t h i s s e c t i o n w e w i l l c o v e r :

Direct vs IndirectSales - A/R - Cash InAllowance forDoubtful Accounts

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Page 5: Statement of Cash Flows - Direct Method May 2016

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Page 6: Statement of Cash Flows - Direct Method May 2016

CASH FLOWSFROM

OPERATINGACTIVITIES

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Page 7: Statement of Cash Flows - Direct Method May 2016

HOWMUCH $

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Page 8: Statement of Cash Flows - Direct Method May 2016

RELATIONSHIPS

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Page 9: Statement of Cash Flows - Direct Method May 2016

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INTERACTIONSIncome Statement

andBalance Sheet

Page 10: Statement of Cash Flows - Direct Method May 2016

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CASH FROMCUSTOMERS

SalesIncome Statement

Page 11: Statement of Cash Flows - Direct Method May 2016

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DEBIT: A/RCREDIT: Sales

Page 12: Statement of Cash Flows - Direct Method May 2016

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CASH FROMCUSTOMERS

A/RBalance Sheet

Page 13: Statement of Cash Flows - Direct Method May 2016

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SALES $1 ,000 ,000

A/R - end of year (100 ,000)

Collected? 900 ,000

PROBABLY NOT

Page 14: Statement of Cash Flows - Direct Method May 2016

WE NEEDTHE

CHANGEIN A /R

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Page 15: Statement of Cash Flows - Direct Method May 2016

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SALES $1 ,000 ,000

A/R - end of year (100 ,000)

A/R - beginning of year 95 ,000

Collected? 995 ,000

MAYBE

Page 16: Statement of Cash Flows - Direct Method May 2016

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A/R (5,000)Sales 

>Collections

Page 17: Statement of Cash Flows - Direct Method May 2016

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ALLOWANCEFOR

DOUBTFULACCOUNTS

Page 18: Statement of Cash Flows - Direct Method May 2016

CollectWrite Off

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A/R GOES DOWN WHEN:

Page 19: Statement of Cash Flows - Direct Method May 2016

AllowanceBad DebtExpense

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WATCH FOR

Page 20: Statement of Cash Flows - Direct Method May 2016

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▲ ALLOWANCE<

BAD DEBT EXP=

WRITE OFFS

Page 21: Statement of Cash Flows - Direct Method May 2016

Net Change $1,000

Bad Debt Exp $1,500

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Page 22: Statement of Cash Flows - Direct Method May 2016

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+$1,500Allowance = 

$4,500

Page 23: Statement of Cash Flows - Direct Method May 2016

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WRITE OFFS

=

$500

Page 24: Statement of Cash Flows - Direct Method May 2016

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SALES $1 ,000 ,000

A/R - end of year (100 ,000)

A/R - beginning of year 95 ,000

Collected ?????????

Page 25: Statement of Cash Flows - Direct Method May 2016

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NET▲ A/R = +$5,000WRITE OFFS = $500

REAL ▲ A/R = +$5,500

Page 26: Statement of Cash Flows - Direct Method May 2016

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SALES $1 ,000 ,000

A/R - end of year (100 ,000)

A/R - beginning of year 95 ,000

WRITE OFFS ( 500)

Collected $994 ,500

Page 27: Statement of Cash Flows - Direct Method May 2016

R e c a p o f w h a t w e c o v e r e d :

$ Received andPaid

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Page 28: Statement of Cash Flows - Direct Method May 2016

R e c a p o f w h a t w e c o v e r e d :

$ Received andPaid

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Sales and ▲ A/R

Page 29: Statement of Cash Flows - Direct Method May 2016

R e c a p o f w h a t w e c o v e r e d :

$ Received andPaidSales and ▲ A/R

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Adjust For WriteOffs

Page 30: Statement of Cash Flows - Direct Method May 2016

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