FA 46 - Statement of Cash Flows Example - Direct Method

[@kevinfidler6287]

I am also taking an accounting course online. These videos are so helpful. I use my textbook for format when handing in assignments, but I use your videos as my course material more often than the textbook.

[@hongkaren3013]

This video is the best explanation of the direct method of the SCF. I use the T account to help me to understand the logiical but your video is more clear. Thank You

[@unconventionalsuburbian9758]

I am watching this whole playlist, many videos mulitple times. Thank you for making them! However, the ones that scroll all over the place (this one) are really challenging to follow

[@nawaraltameemi2258]

Such a great explanation and a great Professor!! Thank you so much

[@tayasigerson]

This video is so helpful! I'm learning cash flows now in my course and I didn't understand why some accounts were being subtracted from cash and other accounts were being added. I just didn't get the logic behind it. Thank you.

[@HayleyStahl]

You. Are. Awesome. I don't have a huge mind for numbers and I had to take Accounting I online in college, and this was my first experience with accounting. You helped me get through this semester, from wanting to drop out to my current A. Thank you so much!

[@rutajankaityte385]

Really appreciate these lectures, it's so helpful!!

[@Teewaree13]

Thank you for this lesson. I am a senior in the business and hospitality school at my university, and this is extremely helpful🤑🔋

[@chiazamiwunna5534]

Please, don't stop making Accounting videos. I have learnt so much from you. Thank You!

[@Quidditchhh]

Bless you Tony Bell, I love you

[@BlimiKatz]

Hi, I was excited to find your accounting you-tube videos. I am an accounting major and plan on taking the screening exam. Are your practice problems in general similar in style to the screening exam?

[@Steve90UK]

Cash flow statement is great for seeing what happened with cash in the past, but how do we plan and track cash flow before and during a quarter or year? If anyone could please point me in the right direction to one of Tony's videos I'd really appreciate it

[@rahulrao9868]

No one explained better than you

[@cab06215]

16:15 you meant cash paid for interest? Love to see you making some funny error. Huge appreciation from Korea!

[@reneeschaubroeck7651]

You are a life savor.

[@Cat-hb3cf]

Thanks Sir Tony for this elaborate explanation! I'm so glad I finally understood it :)

[@munazzamian3278]

The Video is so informative, it explained very well the diagram and it also refers to the book which is very helpful. Thank you

[@kixuh6314]

the proof at the end helped a lot thank you big man

[@HieuLe-lz1do]

Cash received from customer= Sales + decrease in Account Receivables (- increase in A/R) + Increase in Unearned Revenue (- decrease in UR) Cash paid for Suppliers = COGS + increase in Inventory (- decrease in Inventory) + decrease in Account Payable (- increase in A/P)

[@Tony-Bell]

Yes - that definitely works!

[@xuanmaidiep9694]

15:24 Why don't we combine the operating expenses from the income statement with the other operating expenses ($135,000 + $64,000)? Why are you only using the other operating expenses(64,000)? Thank you so much!

[@404TRUCKERTV]

Thank you sir for these uploads!

[@Me-sz7yy]

Cash Collected from customers 7:01+, Cash paid for merchandise 9:06+, 12:19, Cash paid for salaries 13:17+, Cash paid for Operating Expenses 14:17*, Cash Paid for Interest 15:57, Cash Paid for Income Taxes 16:23, Income Tax Payable 19:05+*,

[@devonpritsch]

Question about the operating expenses. I thought the proceeds of the sale of a long term asset (equipment) were investing actives. But, the gain/loss of the sale were part of operating activities. Or do I have that wrong?

[@francisjunior4370]

But the sale revenue include both immediate cash flow but also sale made on credit, so in direct method sale revenue is just basicallly assume as cash is collected immediately?

[@andriskadaga]

Why does a/r decrease cashflow? If an invoice is issued to a customer and Im waiting to get paid that increases a/r but why does that decrease the cashflow? I mean no cash actually left the account by issuing an invoice

[@Tony-Bell]

By itself, no, but we are considering it with sales. So sales + decrease in AR. We make 100,000 in sales, and AR increases by 10,000. How many dollars of sales did we collect? Well if I collected every dollar I sold, it'd be 100,000, but since AR went up 10,000 - I didn't get that money! So of the 100,000 in sales, I only got 90,000 with 10K still collectible. As AR goes up, the cash we collect from our sales goes down.

[@francislee2598]

thanks for sharing your wonderful knowledge

[@atefehrashidi327]

why you didnt calculate 135,000 in operating expenses?

[@ineedstuff8286]

yer a fckin champ!!!. thank you for your contributions to the field!

[@gracepaterson6734]

Excellent!

[@ashsh7220]

Hi Tony, great video, just struggling on one aspect. the last 1 minute example of income tax payable and expenses presumes the firm paid $11k for their income tax? As otherwise, the difference between income tax expense $43k and the remaining income tax payable $10 is $33k that was paid.Why is there an assumption that 11k was paid?

[@sizibaemmanuel3611]

Are you still in need of your answer? I know a method that can help you.

[@lynch906]

@@sizibaemmanuel3611 please share with me the method that can help

[@teeyoo9315]

The entire tax bill was 44,000. There is an 11,000 balance per balance sheet. The assumption is that 33,000 was paid. The 10k is what’s left after the payment.

[@chocym4965]

You are a life saver🤩

[@BlimiKatz]

Also do the videos only members have access to help include practice problems inside the video? If so do these problems help prepare those who plan to take the screening exam?

[@Tony-Bell]

I'm not familiar with the screening exam - the membership is simply more problems like the ones in my videos - (all problems from the workbook).

[@garaadmohamed9207]

I confused increase and decrease of Inventory A/R and A/p anyone can help me pleas

[@siphemgilane7281]

Thank you ❤

[@Chahdi975]

Thank you very much for the workbook. It is very interesting. How can check my answers? is there any corrections or answer key?

[@Tony-Bell]

It's just the videos - follow along with the videos and double check your work!

[@garaadmohamed9207]

Let us check our answers and work together

[@amirjalil8859]

How to become a member??? I couldn't find any join button...

[@vkrgfan]

Wouldn't salaries and other expenses be under the same category as the operating expenses? Received from Customers: Sales + - Accounts receivable Received from interest: +- Interest revenue Paid to suppliers: COGS + - Accounts payable + - Inventory Paid for operating expenses: +- Wages (salaries ) + rent expense (prepaid rent) + Other expenses The formula depends on what items you have on the statement.

[@vikasvarma5443]

Why did intrest expenses comes in operating activitie i.think it is financial activities

[@Tony-Bell]

I think there are options - but most companies I'm aware of do this in the operating section - see here: www.investopedia.com/investing/what-is-a-cash-flow-statement/

[@chiragpanjabi7907]

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[@shaunawoodward1295]

So I just became a member and wanted to tell you how valuable your content is. You have a natural (and no doubt refined over time as well) talent in making accounting material easier to understand. You have been a resource for me in quite a few situations where I just wasn't getting it until I watched your videos. This is particularly true with cash flow. I spent over 6 hours yesterday reading and rereading the section on indirect method in my textbook as well as the other 2 resources on cashflow for my class. I was starting to panic because I just couldn't process it, then I thought to see if you had a video on it. I kid you not, 3 1/2 minutes in to the video and I let out a deep sigh of relief, downloaded the template and worked through it as I watched the video, and I'm getting it! Your tip for the indirect method for when assets go up, cash goes down etc. was a game changer. So, sorry for the long comment but thank you very much for what you do!

[@Tony-Bell]

Thank you so much for that comment - made my day~!

[@pubgmobileclashroyale4725]

Thanks for explanation, Statement of Cash Flows was one of the hardest to understand for me, but you tought it very well

[@rezkiambong4698]

Shouldn't an increase in accounts payable be added though? cause you stated that an increase in A/P indicates that we are keeping the cash and not paying those payables, why should we subtract our cash if the A/P is increasing hence keeping more money?

[@Tony-Bell]

Increase in AP means cash is increasing. So when we calculate "Cash Paid" a decrease in AP indicates more cash has been paid out (ie an increase in AP is good for our cash balance meaning less cash has been paid out!) The key is for that line we are calculating cash paid.

[@mostafaahmadi4998]

Just brilliant. So much better than any textbook. I just wanted to ask you a quick question, please. @14:59 shoulder not it be "so, I'm not including it here because this is cash flow from INVESTING activities so this 9,000 does not belong here" rather than "so, I'm not including it here because this is cash flow from OPERATING activities so this 9,000 does not belong here"?

[@lynch906]

Good for you, you captured the error. I missed it. The correct statement should be "I am not writing it here because it is a cash flow from investing activities."

[@Tony-Bell]

You're absolutely right - what a strange slip of the tongue by me - good catch!

[@celeske7]

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