ACCTG 101 Lecture Notes - Lecture 15: Common Stock, Cash Flow, Current Liability
Document Summary
Steps to compute net cash flow from oa. Adjust net income (loss) for noncash revenues, expenses, gains, and losses. Noncash revenue and expenses (add depreciation and amortization to zero them out because each year no actual transaction resulting in loss occurred) Gains and losses (part of ia, therefore we remove form oa and record them in ia by subtracting gains from income and adding losses. Adjust net income (loss) for changes in current assets and current liabilities. Sum the amount from steps 1, 2, and 3 to get ncf from operating activities. To determine the cash flows from investing activities, we analyze changes in all noncash asset accounts not used in computing net cash flow from operating activities. Our objective is to identify any investing cash flows related to these changes. The increase means investments must have been purchased, and the additional data reported indicates cash was spent to purchase long-term stock investments.
