Introduction Many argue that the cash flow statement is the most important of the financial statements. This actually quite sound of an argument considering that once a business, particularly small and medium enterprises (SMEs), runs out of cash, it usually winds up out of business soon after. One other reason that cash flow statements are important is the comparability they offer. Cash flow statements can be used to clearly assess the health of one business from another largely because across most
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statements are known as Hong Kong Financial Reporting Standards (HKFRSs), including their interpretations (Deloitte Global Services Limited, 2013). Other mandated GAAP requirements are found in Hong Kong’s Companies Ordinance as well as its Listing Rules (Deloitte Global Services Limited, 2013). The following paragraphs briefly highlight key financial statement items and their differing treatments by Hong Kong under IFRS and U.S. GAAP. The Balance Sheet While U.S. GAAP only provides a small amount
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net cash flows. Comparison of these constituents ultimately leads to project acceptance or rejection. As suggested by Bester (nd.), there are many advantages to using net present value as a capital budgeting evaluation technique. Some being as follows: * Incorporates the risk involved with a specific project. * Will depict the potential increase in firm value (i.e. the increase in shareholder wealth). * The time value of money is taken into account. * All expected cash flows are
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Which accounting system? Reserves Budgeting Cash flow Book keeping Petty cash Bank reconciliation Finance reports Annual accounts Glossary Financial controls are the written rules and procedures for financial control and management that all organizations should have. Financial controls should cover, for example, who can sign cheques, who maintains the cash books, and how petty cash is administered. Some of these rules will be laid down by the constitution (or, in the case
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SINGLE CASH FLOWS Future Value: FV = PV × (1 + r)n Present Value: PV = Future Value (1 + r)n PV & FV: MULTIPLE CASH FLOWS Example 1: Multiple Cash Flows In two years from today, the following cash flows will have a future value of $3032.32: $200 today, $Y at the end of one year, and $2,400 at the end of two years. The annual interest rate is 4%. What is Y? A) $330.00 B) $400.00 C) $416.00 D) $432.64 E) $167.55 PERPETUITIES & ANNUITIES Ordinary (regular) Annuity & Ordinary Perpetuity – Cash flows
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China IV essay questions Statement of cash flow is a useful statement for external users to determine the viability (especially the company’s ability to pay bills) because it reports the sources, uses and changes in cash of a business. It also explains the liquid resources condition, the flow of cash in and out of the business, any changes in cash on the balance sheet in a period of time. Based on China Trade’s statement of cash flows, the company reported three thousand dollars net loss from
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CHAPTER 2 FINANCIAL STATEMENTS, TAXES, AND CASH FLOWS Learning Objectives LO1 The difference between accounting value (or “book” value) and market value. LO2 The difference between accounting income and cash flow. LO3 How to determine a firm’s cash flow from its financial statements. LO4 The difference between average and marginal tax rates. LO5 The basics of Capital Cost Allowance (CCA) and Undepreciated Capital Cost (UCC). Answers to Concepts Review and Critical Thinking Questions
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controller’s work. D) None of the above. Chapter 2 Present Values, the Objectives of the Firm, and Corporate Governance Question 2 According to the net present value rule, an investment in a project should be made if the: A) Net present value is greater than the cost of investment B) Net present value is greater than the present value of cash flows C) Net present value is positive D) Net present value is negative Question 3 Mr. Free has $100 dollars income this year and zero income next year. The market
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Case Analysis 10-3 Kansas City Zephyrs Baseball Club, Inc. I.Issues Why does net income not equal cash flows? Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened? What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same
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investment or project and decide which of them qualify as good uses of the money stockholders have invested in the firm * Make financing decisions * Decision of how to pay for the investments * Make short-term cash needs * Ensure that the firm has enough cash on hand to meet its obligations from day to day Goal of
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