Ask Experts Questions for FREE Help !
Ask
    CARLA BIANCHI's Avatar
    CARLA BIANCHI Posts: 1, Reputation: 1
    New Member
     
    #1

    Jan 15, 2008, 10:02 PM
    Accounting and stuck!
    Hello,
    Indicate which of the following current assests and current liabilities are operating accounts and thus included in the adjustment of net income to cash flow from operating activities and what is considered cash, investing, or financing accounts?

    Accounts payable
    Accounts receivable
    Notes payable
    Marketable securities
    Accrued expenses
    Inventory
    Notes receivable-officers
    Current portion of long term debt
    Dividends payable
    Income taxes payable
    Interest payable
    Certificates of deposit

    What is the diff. b/wthe net income then and the cash flow of operations?
    Clough's Avatar
    Clough Posts: 26,677, Reputation: 1649
    Uber Member
     
    #2

    Jan 15, 2008, 11:39 PM
    (Question moved from Introductions to Finance & Accounting to get more exposure.)
    MaggieMouse's Avatar
    MaggieMouse Posts: 226, Reputation: 8
    Full Member
     
    #3

    Feb 5, 2008, 09:29 PM
    Net income just shows how much the business makes, but they could be uncollectable. In another words, the income cannot be all sitting at accounts receivable, which means no cash inflow.
    ddrahota's Avatar
    ddrahota Posts: 6, Reputation: 0
    New Member
     
    #4

    Feb 11, 2008, 08:07 PM
    Accounts payable-operating account
    Accounts receivable-operating account
    Notes payable-financing
    Marketable securities-investing
    Accrued expenses-operating account
    Inventory-operating account
    Notes receivable-officers--investing
    Current portion of long term debt--financing
    Dividends payable-financing
    Income taxes payable--I believe operating
    Interest payable--financing
    Certificates of deposit--investment

    The difference between net income and cash flow is that net income is based upon items such as account receivable that does not provide any cash. If I sold $5000 in a month, but never received any cash, the net income (assuming COGS is 0) is $5000, but the cash flow is $0.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #5

    Feb 11, 2008, 09:02 PM
    You can't memorize every account. Here is a general rule of thumb. Think about your accounting equation: Assets = Liabilities + Equity. On the left is assets, and that is investing activities. On the right are liabilities and equity, and those are financing activities.

    The exception is the current stuff, i.e. current assets (like accounts receivables) and current liabilities (like accounts payable). Those are not considered investing and financing. They are related to your day-to-day operations and therefore are operating activities.

    There's an exception to the exception though. :-( Dividends payable is a current liability but is not operating. It still goes in with the financing stuff cause it's related to stock.

    So take your balance sheet, knock off current assets and the rest is investing. Then take the whole other side and knock off current liabilities and the rest is financing.
    ddrahota's Avatar
    ddrahota Posts: 6, Reputation: 0
    New Member
     
    #6

    Feb 11, 2008, 09:17 PM
    Morgaine explains it pretty well. I was never taught that way, but after doing accounting for awhile, the stuff will come to you much easier. There are three main sections to a Cash Flow Statement: 1. Operating activities 2. Investing activities 3. Financing activities

    Figuring out the difference between them I just by default put stock activity into the financing part because you receive money when you initially sale the stock. That is equity financing and your repayment on that financing is to give dividends. Things like paying off bond debt and loans are also financing. It is pretty straightforward: Did the transaction about to be made result from getting money from the party you are giving money back to? If this is so, then they were a source of financing and paying them back is also in the financing category.
    Investing is basically the opposite, if you are receiving money from a party that you gave money to previously, they are paying you back and the initial money you paid out was an investment. The money you are receiving is the fruit of that investment. Basically, an investment for one, is financing for another. The banks loan to you was an investment from their perspective, but financing by you. Operating activities are current and what are used to run the business. Inventory, accounts receivable, payable, etc.
    Sleven's Avatar
    Sleven Posts: 1, Reputation: 1
    New Member
     
    #7

    Feb 14, 2008, 12:19 AM
    Quote Originally Posted by CARLA BIANCHI
    Hello,
    Indicate which of the following current assests and current liabilities are operating accounts and thus included in the adjustment of net income to cash flow from operating activities and what is considered cash, investing, or financing accounts?

    accounts payable
    accounts receivable
    notes payable
    marketable securities
    accrued expenses
    inventory
    notes receivable-officers
    current portion of long term debt
    dividends payable
    income taxes payable
    interest payable
    certificates of deposit

    What is the diff. b/wthe net income then and the cash flow of operations?
    Inventory

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

What is the difference between Managerial Accounting and Cost Accounting ? [ 3 Answers ]

Hello Dears, I want to know about the difference between Managerial Accounting and Cost Accounting. Thanks ! Sincerely Yours, Mohammad Naim

Accounting steps for the accounting cycle [ 2 Answers ]

I think I wrote all the steps wrong can someone correct them for me thanks. List the following steps of the accounting cycle in their proper order: a) Preparing the post-closing trial balance.9 b) Posting the journal entries c) Journalizing and posting adjusting entries d) Preparing the...

Stuck [ 11 Answers ]

I have no idea what to do any more. The man I live with is a drug addict, abusive and just plain cruel. I've tried the shelters but their full. Also, you have to have a police referral. But that's a joke. Every time they come out, they make him go downstairs. They took pictures of my face and neck...

Stuck- [ 1 Answers ]

A horizontal rifle is fired at a bull's eye. The muzzle speed of the bullet = 670 m/s. Barrell is pointed directly at the center of the bull's eye- the bullet hits the target 0.025 m below the center. What is the horizontal distance between the end of the rifle and the bull's eye? I need a...


View more questions Search