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Statement of Cash Flows (Indirect Method)

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This video demonstrates how to prepare a Statement of Cash Flows using the Indirect Method. A comprehensive example is provided to illustrate how an income statement, comparative balance sheet, and additional information are used to create a Statement of Cash Flows from scratch.
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Опубликовано:

28 авг 2024

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Комментарии : 145

@jayminpatel4790 5 лет назад

who is watching this a day before their final exam

@johnathannorthrup8013 5 лет назад

not the final but right before an exam

@DeadpoolWithHair 4 года назад

7 hours before lol

@raifleming5218 4 года назад

5 days b4

@riyachhetri5686 4 года назад

Mee😭

@aleksikulmala6397 4 года назад

19mins before

@Xbendoesbricks 5 лет назад

Why can't my teacher just speak like this MAN!

@jinlishen6972 3 года назад

no single one of my teacher speak like this man

@MyFinancialFocus 2 года назад

This cash flow statement method is more fun in my opinion. I like being able to see all of the non-cash revenues and expenses that get subtracted and added back to the cash flow statement. Super informative!

@Sethermiester Год назад

You're my hero Edspira.

@reidclanton4081 6 лет назад

Wow you're great at teaching. Clear quick yet easy to follow.

@Edspira 6 лет назад

Thanks Reid!

@ajmassey2144 3 года назад

I wish I had started to watch your videos before starting my accounting class. You are the best.

@Edspira 3 года назад

Happy to help!

@ahlanaswisher3776 Год назад

Thank you this is great!

@Edspira Год назад

Glad it was helpful!

@smv1995 7 лет назад

Your videos are FANTASTIC!! Really helping me understand the material better! -UCF Accounting Undergrad

@MrDensity11 4 года назад

Its been 2 years im now a undergrad any advice

@m.khizer592 9 месяцев назад

@@MrDensity11 Its been 4 years im now a undergrad any advice?

@MrDensity11 9 месяцев назад

@@m.khizer592 After graduating in 2021, I snagged a job as a staff accountant at a dairy plant, pulling in $70k a year. Gotta admit, the work isn't quite as challenging as the college courses! My advice is , understand GAAP and the basic accounting principles from the intro classes? Total game-changers. If you're eyeing a better-paying job after college or if you want more information lets connect. Im doing this because I wish i know everything i know now that I dint known 4 years ago. I more than likely would have been making more money by now if I did.

@MrDensity11 9 месяцев назад

@@m.khizer592 nzzavala

@johnteyed6080 9 месяцев назад

You made it so easy to follow without jamming up my brain!

@844pm2 Год назад

thanks for the lessons

@MrLblaze 7 лет назад

Thank you for sharing this video , it helps me a lot for my mid sem exam tomorrow !

@Edspira 7 лет назад

No problem. Thanks for watching!

@1996bongo Год назад

Really good explanation, thank you! Better than my teacher who I pay thousands of dollars to teach me!

@BigTimeRush14100 5 лет назад

Thank you! this helped a lot. My Final is tommorow. At 8am (on a freaking saturday of all things) And this was the one day I ended up missing of class and I just couldn't figure it out.But this helped to understand it much better. Thank you.

@joshuasmith6950 4 года назад

Ha! My final exam is tomorrow (Saturday) at 8:00 AM. I'm in a panic. 😂

@safye4 4 года назад

@@joshuasmith6950 7:30 AM here. Good luck!

@Utsutsuu 5 лет назад

Needed this right before finals, thank you so so much!

@kimberleezeno3965 4 года назад

THANK YOU FOR THIS VIDEO! I could not understand this statement until it was broken down the way you did it.

@olivarez1996 7 лет назад

Thank you! Thank you! & Thank you!

@Edspira 7 лет назад

No problem! Glad you found the videos helpful :)

@PraiseTheLord95 4 года назад

Very Easy to Understand ... Great illustration! ... Thank you for your presentation!

@si3434 3 года назад

this video is just soooo good. i spent nearly an hour reading book without understanding anything but 8m watching this video and got all the main ideassss

@一点一滴学英文 6 лет назад

I enjoy watching your video. It seems that accounting is not so difficult.... Thank you!

@Edspira 6 лет назад

Glad to help!

@ilulu.08 4 года назад

Thank you for helping me a day before final exam

@diontaedaughtry974 6 лет назад

Thank you this was very helpful and informative 👍👍

@Edspira 6 лет назад

Nice!

@mahnoorjawwad7937 7 лет назад

sir I want to praise, your way of teaching is MashAllah very good, i have learned intory, now I am learning Cash Flow

@sandroobeid2839 7 лет назад

#MashAllah

@soodmm13 7 лет назад

#MashAllah

@aristojuan7926 4 года назад

#MashAllah

@RajSharma-ff8iq 7 лет назад

your videos are always helpful. Thank you.

@Edspira 7 лет назад

Thank you for the kind words my friend

@ramisaleh6793 7 лет назад

You saved my Day ! Thank you so much !

@Edspira 7 лет назад

No problem! Happy to help my friend :)

@moshegoldstein1114 2 года назад

Great video as always. Quick question why did you account for the full 23k increase in A/P as a an increase to cash flow provided by operating activities? Since 8k was used to buy equipment it was capitalized and was never an expense and so it didn't decrease net income , that being the case why would we add it back to net income to get cash flow from "operating activities" ?

@delim200 6 лет назад

amazing explanations thanks once again for providing these videos with us.

@Edspira 6 лет назад

No problem Delim. Thanks for watching!

@rob8482 7 лет назад

Always great lectures!

@Edspira 7 лет назад

Thank you!

@samuelkwon5824 6 лет назад

I think the thing I don't get is the increase in A/P being added back into net income. If we just bought more office supplies on account before the year end, I don't see an account for expense triggered at all. Confused! Thank you for this video btw

@Purush97 5 лет назад

Love your videos, super helpful. I just have one thing I don't understand on this video, in Cash Flows from Investing, why is the purchase of equipment a negative, because your list says that the equipment was purchased on credit. Shouldn't it be a positive cash flow, or am I misunderstanding something? Thanks! :)

@jonathanlarco2453 5 лет назад

Thanks for the help. Can you do a video with the effects on inventory and accounts payable in relation the operating cash flow statement?

@Edspira 5 лет назад

Jonathan, I cover how to handle these accounts in my Cash Flow from Operatios video: www.edspira.com/topic/cash-flow-operations/ Also, on my website I have a whole series on Statement of Cash Flows: www.edspira.com/lessons/statement-cash-flows/ Best of luck in your studies!

@chinthakakumara9939 6 лет назад

Thank u so much It's help me to lot, will see it again

@vickiliu4887 5 лет назад

best video out there to help us understand the statement of cash flow, but how is issuance of stock increasing cash flow?

@Edspira 5 лет назад

Lets say the company issues stock, and the stockholder gives the company cash in return. Since the company is receiving cash (cash was provided), then the value would be positive.

@ryanclarke8889 6 лет назад

Great video man

@Edspira 6 лет назад

Thanks!

@undervalueds 5 лет назад

Thanks, very well explained and presented

@tameemwahba8060 4 года назад

this helped me so much

@lauelarousse 6 лет назад

Thank you!

@Edspira 6 лет назад

No problem!

@madwilli3205 8 лет назад

Accounting noob question here. Why doesn't the purchase of equipment considered an expense and included included on the income statement like Operating Expenses?

@Edspira 8 лет назад

+Mad Willionaire Great question! When you purchase equipment, you "capitalize" it (this means you make it an asset, which will appear on the balance sheet). Then you gradually take depreciation expense on the asset each year-- this depreciation goes to the income statement, and it also goes to an account called "accumulated depreciation" that will be netted against the asset's gross book value (the original purchase price) on the balance sheet. Thus, the asset is expensed gradually over the period of time during which you use it to generate revenue. This is an example of the "Matching Principle" of accounting: we try to match expenses with the periods in which they are used to generate revenue. I hope this helps, best wishes!

@tellyjr100 6 лет назад

You are speaking my language.

@Edspira 6 лет назад

Awesome. Thanks for watching!

@Ahmed8012k 2 года назад

Perfect

@maraamahsan1648 7 лет назад

sir, could you explain how did you calculate the retained earnings in the balance sheet?

@Edspira 7 лет назад

Ending Retained Earnings = Beginning Retained Earnings + Net Income (or minus Net Loss) - Dividends

@maraamahsan1648 7 лет назад

Thanks! Your lectures are quiet useful!

@itsbea3859 Год назад

I LOVE YOU

@Edspira Год назад

😀

@mrmhjr7 7 лет назад

In a way the Increase in A/P are a credit line so a "hidden" CF financing within CF operation?

@Maldive177 2 года назад

sir, you just got yourself a new subscriber. very good. how come I paid a lot money to university to learn where I did not get a good teacher like you........ sad......i suggest to cancel all universities, it wastes all the time and money. you will never learn anything from, there, you basically just buying a piece of paper, the degree........

@marjbigaran2920 6 лет назад

if there is a change in inventory, where does it go?

@arshleenkaur789 7 лет назад

HI..... I have a question that if we are not taking any of the expenses because we already have them in net income, than why we are taking payment of dividend

@Edspira 7 лет назад

Hi Arshleen, we are adjusting some of the expenses, so I'm not sure what you mean. For example, we add back depreciation expense in the cash flows from operating activities section because it was a non-cash expense that reduced Net Income but had no effect on cash.

@arshleenkaur789 7 лет назад

Edspira i got that but i could not understand that why are we taking dividend....as we take dividend expense in income statement under expenses.

@yWHATTHEHELLy 6 лет назад

Dividend are not part of the Income Statement

@mythaelle 4 года назад

watching this before my final exam in 2 days 😭😂

@cynthiahawkins2142 4 года назад

I am confused about noncash transactions. I heard you mention in your video that when a company issues stock, "you are getting cash in return." When a company issues stock, receives the cash, and then pays off/retires long-term debt, why would we report the cash from issuance of stock in the financing section of the statement of cash flows?

@abubakarumarmurnaimurnai3372 6 лет назад

thanks for the videos.. really helpfull.

@beybladeog 5 лет назад

Thanks bruh

@TheAceState 6 лет назад

how do you determine the net income if it is not given?

@Edspira 6 лет назад

You can look at the income statement to get the net income for a company, or if you know the revenue and expenses you can calculate net income (essentially revenues minus expenses). Here's a video that describes how to calculate net income: edspira.com/topic/an-overview-of-the-income-statement Thanks for watching!

@ahmedalswaity7914 7 лет назад

there's something that i just cant understand! Why does cash flow decrease when A/R increases I understand that cash flows increase when A/R decreases because we are actually being paid, however cash isn't actually flowing out of the company when we are selling, its just that people owe us money now.

@bigmanpuri 7 лет назад

for cash flows from investing would it go there if it is a purchase and/or sale of land?

@rgomes2186 3 года назад

Hi Thank you for your video. Please, where does the 20,000 from Inventory go? You did not include it in the Operating activities, which I believe that is where it goes and it has to be substracted as it is an Increase in Current Assets paid cash. The Net Cash at end should be 44,500. Please shed some light here. Once again, thanks for your time.

@izzatali6412 6 лет назад

i dont get why some numbers are negative or in bracket ?

@Edspira 6 лет назад

Numbers in brackets indicate that the number is negative. For the Statement of Cash Flows, a negative number indicates that cash was used.

@susianafebriyanti1483 6 лет назад

how did you get the payment of devidend?

@Edspira 6 лет назад

At 1:32 in the video, I stated that the company paid a cash dividend of $500. Since a dividend decreases cash, it is negative on the Statement of Cash Flows.

@yangli5208 6 лет назад

Why the equipment purchase 0 out with AP? The AP should included the equipment purchase since this is paid by credit. Thank you.

@Nick_88888 5 лет назад

in this case, we have paid for the equipment purchase at the date of the purchase itself for the whole amount and that reason alone suggests that they are do not affect account payable, however, if you have purchased a machine, from which you are waiting economic benefits and which you have purchased to do business with, that is considered an investment in the C.F.S and you should not add that to the operating section of the statement. As shown in the video, it should be added under the investing section and it should be shown as Yearly amount paid for PPE. Hope this helps you clarify the whole picture. Peace

@erikajeansalazar7464 4 года назад

Can someone please explain why the 8,000 purchase for equipment is not a positive number? Doesn't expense get added back? I don't understand.. huhu. Same with the financing. Don't we subtract increase in cash and add decrease in cash? I'm so confused!!!

@MrBanChinga 8 лет назад

Why do you not mention interest payment and depreciation??

@shaziahussain4590 8 лет назад

Check in the Financial Accounting section.

@modupeolukanni2027 7 лет назад

I still don't understand why the purchase of the equipment is -8000

@lewis7157 7 лет назад

modupe olukanni because u spent cash to buy equipment. It's a cash outflow

@DHEspana 6 лет назад

They didn't spend cash, he's wrong. It's not an outflow we know it's just in an increase in Payables.

@youtubeistrash2 3 года назад

purchase of equipment on credit isnt affecting the net income...so why is it even being subtracted back out of net income by 8000?

@Brian-cw7mv 2 года назад

I'm in grad school for accounting, and still, I can barely understand these fucking things. Thanks for the help!

@cassandrareed9690 6 лет назад

what grade are you guys in? im in the 9th trying to understand this lmao.

@lakyahsworld6783 4 года назад

can you help me build a statement of cash flows from forecasting

@norshuhada329 3 года назад

hi please help me how to find 5 ways analysis of return on equity 🥺🥺 , or anyone have any idea about this please help meee ... thank youu

@tahirgarayev6224 7 лет назад

Hi, I watched your video, and found it a little bit misleading. Why? Just prepare the Cash flow on the base of direct method, and compare the operating activities results on both methods. Using direct method you will have the operating CF = 15000. Using the indirect method you sould also have the same result, but instead you have 23000. Because you added in current liabilties the purchase on credit of the car 8000. But as we know the purchase of car is investing activity, and shouldn't be added in operating activity. So revise and make corrections in your video.