Statement of Cash Flows - IFRS Edition

Description

Cash is important to any business. Investors usually look at net income as a main indicator to evaluate the company’s performance and project future results. But the main question here, how long this profit would be expected to continue? Revenues and expenses are recognized based on accrual accounting principle. As a result, we can report our profit in the income statement even though we didn’t collect the cash from our customers. If this case continues for a long period, the company will start to generate negative cash flows from its operations. In the long run, it will not be able to settle its liabilities and it may be filed for bankruptcy.

This course will walk you through all the basics of preparing the statement of cash flows in compliance with the International Accounting Standard (IAS 7). We will start with the importance of cash, the purpose, and the usefulness of the statement of cash flows. After that, we will explain all related subjects step by step.

The direct method is recommended by the standard. But, we will focus more on using the indirect method since it is widely used. There are two exercises to practice with me. Gradually you will be ready to prepare the statement in any company.

Course Content

This course is will covers the basics of preparing the statement of cash flows as follow:

• Why cash is that important?

• Purpose of the statement of cash flows.

• Usefulness of the statement of cash flows.

• Operating cash flows.

• Investing cash flows.

• Financing cash flows.

• Cash and cash equivalents.

• The general format of the statement of cash flows.

• Sources of information to prepare the statement.

• Direct vs indirect methods.

• Indirect method items.

• Disclosure of interest and dividends.

• Non-cash transactions from investing and financing activities.

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