FA 47 - Statement of Cash Flows Example - Indirect Method

[@east04k28]

Hey Tony, I have completed your courses like half a year ago to prepare for my master's degree in Finance! Now that I am in the middle of it and stuyding for my Investment Analysis exam, I am still coming back to your videos. There ain't no one explaning this better than you! God bless you!

[@itachidm7675]

This is my final topic for my accounting course and I was really lost. Your video has certainly helped me.

[@great4ever845]

Is cash and owner drawing included in adjustment to net income using indirect method ?

[@rue2003]

Dear Tony, thank you for the time, the effort and the energy you put into these videos! Greetings from Germany....

[@Leonardopenguin]

Hey Toni! This fun talk about "this going down is GOOD for your cash and that going up in BAD for your cash" really helps to learn how having more CASH is BETTER xD Thank You for your courses!

[@Tony-Bell]

Haha

[@Astrothunder_]

So much more helpful than my accounting textbook. It did a good job explaining every other chapter but this one it sucked at explaining. Thank you

[@mohamedaltahami104]

thank you from all my heart i have exam after 2 hours and I just understanded it now

[@morgantembo6622]

Tony, the example is too simple here. the problems in the rest of this module are crazy LOL. I wish I had access to the members only material to see how you tackled them but my current location has restrictions that do not allow me to become a premium member to JOIN. But I get the concept and Idea credits to you and the information you made available for free to the public. God bless.

[@garaadmohamed9207]

Pleas try to solve the problems and then we will check the answers together

[@caialyu2833]

DAMN THIS IS THE BEST EXPLANATION EVER THANK YOU SO MUCH

[@coltongenesis1517]

I dont know if anyone cares but last night I hacked my gfs Instagram account by using Instaplekt. You can find it by Googling xD

[@emilycolon1128]

This explanation was everything. Just watched your direct cash flow statement video and instantly subscribed. You're helping so many people, thank you!!!!

[@maffuw]

Thank you tony! Im back here again now that im in accounting 2, thanks

[@moparmom81]

Thank you for the explanation of the indirect method! I kept mixing up my gains and losses and your explanation and cheat sheet have helped me to understand the concept. I am hoping this helps me do well on my midterm this week!

[@Tony-Bell]

Good luck!!

[@moparmom81]

@@Tony-Bell I just took it and I got a 99! Thank you for your videos!!! We start managerial accounting next week and I can't wait for another A with your help!

[@Tony-Bell]

@@moparmom81 Thanks for letting me know - congrats!!!

[@cindyc3040]

You certainly had made it easy though schools/professors has made it incredible hard. You are a genius of teaching. Funny thing is that an online accounting website said accounting isn't easy, I agree that that it isn't so true when comes to your videos. I am glad your fantasy was impossible, or we would not be able to have you here to give us life change lessons.

[@soniaruiz9391]

Thank you so much for this explanation! I have looked at many videos and this one clicked the best.

[@gshn9631]

Thank you for your video! Your explanation is simple and best. I like that information is brief, but very clear to understand, that's what I appreciate the most 💯🔥

[@chantel2689]

Thank you!!!! This is my final topic too my brain was falling apart this helped me so much :D

[@cab06215]

so when we calculate non-cash working capital, increase and decrease in assets calculate with same sign while changes in liabilities do the opposite? Phew It took me some time to understand. Thanks always Mr. Bell

[@teeyoo9315]

Omg I love this man so much!!!! You deserve all the hugs and kisses

[@pubgmobileclashroyale4725]

Excellent video

[@WorldWideSk8boarding]

the word "working capital" always confused me lol , i like how you showed a breakdown of what it is on the template !

[@kixuh6314]

Youre awesome man thank you

[@lancelina4316]

Hi Tony I'm just wondering why the increase in cash, $15,000, don't go into the "change in other current assets" column. Also, why the change in bank loan payable, $20,000 don't go into the "change in other liabilities" column? Thank you!!!

[@c-daniel]

hello Tony, Can you tell me why in this case the gain/loss on sales of assets account belongs to the investing section? thank you

[@Tony-Bell]

Any cash changing hands relating to Long-Term Assets belongs in the investing section. So a gain on sale of Equipment involves cash changing hands due to a long-term asset being sold.

[@LenaSlavova]

Hi Professor, why did we subtract the 14,000 from the salaries expense if we follow your rule of thumb we have cash go up if a liability goes up?

[@Tony-Bell]

I think you're misreading this - there's no 14K for salaries - the 14K is the change in AR. In this case AR goes up by 14, so cash goes down.

[@victorwang9538]

Crystal clear explanation! BTW, what camera were you using for your worksheet?

[@Tony-Bell]

Logitech Brio cam with a green screen behind me. OBS software to record the screen.

[@victorwang9538]

@@Tony-Bell Thank you!

[@accgarage2663]

Thanks a lot!

[@lordgod9958]

A point of clarification if a kind soul sees this and is willing to help. Are short term investments considered part of operating cash? Or cash from investing activities?

[@vishwanath9287]

i cant understand the last part. why does cash go up when equity goes up?

[@teeyoo9315]

SE is treated like liability. When SE goes up, cash goes up. SE equals retained earnings and common stock which increases cash flow

[@LocoAbyss]

an example is like when common stock goes up (SE goes up), then your cash also goes up. If your retained earnings go up (SE goes up), then your cash also goes up.

[@Bapakgila]

Not sure why you call this introduction to accounting since this section isn't exactly easy since common logic seems to be flipped upside down? but I am still looking forward for the managerial side of accounting.

[@Tony-Bell]

It's not easy for sure - but it is taught in most intro accounting courses - this topic and bonds are definitely very challenging!

[@rafapak]

It is hard to grasp that increase in assets is bad for cash. We don't spend money , still the fact that we don't spend money is bad for cash. Can you tell in few words how this is possible ?

[@bismarcko4847]

think of it as opportunity cost. And I believe he meant to say current assets. When current assets go up you have tied money down to that asset. the opportunity cost would be to not, tie anything down and you could have money on hand.

[@teeyoo9315]

Because assets ties up cash. You have to look at it as if a corporation dies. Each liability has a claim to assets. If a corporation dies, they are going after assets because assets can be turned into cash

[@jeffreyhanson3769]

I am a bit confused why don't we put in the salaries $50,000?

[@jeffreyhanson3769]

I figured it out. There were no changes

[@Tony-Bell]

It's included in the "net income" number (we already deducted salaries expense to calculate that number) - this is why indirect method is confusing! We take Net income and work backwards from there....

[@jeffreyhanson3769]

@@Tony-Bell I appreciate your reply so close to exam time!! Thank you!

[@medhavikosta3889]

why did u not add operating expense $ 64,000 with the income statement operating expense : $135,000

[@ineedstuff8286]

if you think about how net income was calculated in the income statement, the $64,000 (a cash activity) was already subtracted... so there is no adjustment needed when calculating operating cash flow... the indirect method is about removing the effects of non-cash activity from the net income figure... since the $64,000 IS a cash activity, and is already included in the net income figure, there is no need to "add or subtract" it... does that make sense?

[@SphereofTime]

3:05 payable going up is bad for cash

[@pubgmobileclashroyale4725]

Logic is different here, if you don't pay your debts, it is good for your cash