ACTG 3000 Lecture Notes - Lecture 3: Earnings Before Interest And Taxes, Cash Flow Statement, Cash Flow
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This generally includes actual cash on hand (i. e. , kept in a bank account) and cash equivalents (short-term deposits and securities). Investments that are readily convertible to a known amount of cash with no significant risk of change in value are included in cash equivalents. Overdrafts are included when the balance fluctuates regularly from positive to negative: cash from operations differs from net income as the latter is affected by accounting policy choices (i. e. , when to recognize revenues, expenses, assets, and liabilities). However, cash flows are not affected by accounting policy choices. Net income is based on the accrual concept and cash flow from operations is based on receipts and disbursements. Page 202: amortization is added in deriving cash flow from operations from a starting point of net operating income because it is a non-cash expense deducted in the determination of net income. It is not a (cid:683)(cid:660)(cid:656)(cid:662)(cid:659)(cid:644)(cid:646) (cid:656)(cid:647) (cid:647)(cid:662)(cid:655)(cid:645)(cid:660),(cid:684) (cid:642)(cid:660) (cid:644)(cid:642)(cid:660)(cid:649) (cid:650)(cid:660) (cid:655)(cid:656)(cid:661) (cid:659)(cid:646)(cid:644)(cid:646)(cid:650)(cid:663)(cid:646)(cid:645) (cid:643)(cid:666) (cid:661)(cid:649)(cid:646) (cid:644)(cid:656)(cid:654)(cid:657)(cid:642)(cid:655)(cid:666) (cid:647)(cid:656)(cid:659) (cid:661)(cid:649)(cid:646) (cid:642)(cid:654)(cid:656)(cid:659)(cid:661)(cid:650)(cid:667)(cid:642)(cid:661)(cid:650)(cid:656)(cid:655).