The easiest way to understand how to prepare a cash flow statement is to use the accounting equation: Cash + other assets = liabilities + equity. Cash=liabilities + equity - other assets. Therefore any increase in liabilities and equity is a source of Cash and reduction would be a use of Cash. Increase in non-Cash assets is a use of Cash and reduction is a source. The above is generally true except for unrealized gains and losses. This equation solves ANY statement of Cash flow problem. Your lectures are HIGHLY appreciated.
Super!! Thank you Mr. Farhat. I am actually a CMA India student who is preparing for my exams upcoming Jan 2023. This is a short and sweet lecture about the CF statements. Subscribed..
Hi, I understood 90% but I needed that 10% to make it 100%. I googled, I checked my text book. Are all Prepaid, automatically become cash out flow of that fiscal year even if not expensed at all?? Google said """"Overall, an increase in prepaid expenses results in a cash outflow while a decrease results in a cash inflow.""". But I still needed in T account form. And finally, you came in and made it clear. And my understanding is, that the $ 6000 from 1/1/x2 and $220.00 from current year and $ 8000- for1/1/x3- has no impact in the next fiscal year. They will not be in the next year cash flow statement. Am I right. Thank you.
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The easiest way to understand how to prepare a cash flow statement is to use the accounting equation:
Cash + other assets = liabilities + equity.
Cash=liabilities + equity - other assets.
Therefore any increase in liabilities and equity is a source of Cash and reduction would be a use of Cash.
Increase in non-Cash assets is a use of Cash and reduction is a source.
The above is generally true except for unrealized gains and losses.
This equation solves ANY statement of Cash flow problem.
Your lectures are HIGHLY appreciated.
This was helpful, For the first time in my life I've understood adjustment of actuals.
Thank you Usamah, and please visit the website for more farhatlectures.com/
Super!! Thank you Mr. Farhat. I am actually a CMA India student who is preparing for my exams upcoming Jan 2023. This is a short and sweet lecture about the CF statements. Subscribed..
Thank you and please visit the website for more farhatlectures.com/
This lecture was very helpful. Thank you Professor Farhat!
Thank you and please visit the website for more farhatlectures.com/
Hi, I understood 90% but I needed that 10% to make it 100%. I googled, I checked my text book. Are all Prepaid, automatically become cash out flow of that fiscal year even if not expensed at all?? Google said """"Overall, an increase in prepaid expenses results in a cash outflow while a decrease results in a cash inflow.""". But I still needed in T account form. And finally, you came in and made it clear. And my understanding is, that the $ 6000 from 1/1/x2 and $220.00 from current year and $ 8000- for1/1/x3- has no impact in the next fiscal year. They will not be in the next year cash flow statement. Am I right. Thank you.
Thank you this was great
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Thank you and please visit the website for more farhatlectures.com/
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