@@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.
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!
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.
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
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!
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" ?
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! :)
Accounting noob question here. Why doesn't the purchase of equipment considered an expense and included included on the income statement like Operating Expenses?
+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!
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!
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
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.
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.
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.
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........
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.
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
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!!!
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.
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?
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
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.
who is watching this a day before their final exam
not the final but right before an exam
7 hours before lol
5 days b4
Mee😭
19mins before
Why can't my teacher just speak like this MAN!
no single one of my teacher speak like this man
Your videos are FANTASTIC!! Really helping me understand the material better! -UCF Accounting Undergrad
Its been 2 years im now a undergrad any advice
@@MrDensity11 Its been 4 years im now a undergrad any advice?
@@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.
@@m.khizer592 nzzavala
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!
Thank you! Thank you! & Thank you!
No problem! Glad you found the videos helpful :)
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.
Thank you this is great!
Glad it was helpful!
Wow you're great at teaching. Clear quick yet easy to follow.
Thanks Reid!
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
Thank you for sharing this video , it helps me a lot for my mid sem exam tomorrow !
No problem. Thanks for watching!
watching this before my final exam in 2 days 😭😂
purchase of equipment on credit isnt affecting the net income...so why is it even being subtracted back out of net income by 8000?
Thank you this was very helpful and informative 👍👍
Nice!
I enjoy watching your video. It seems that accounting is not so difficult.... Thank you!
Glad to help!
Thanks for the help. Can you do a video with the effects on inventory and accounts payable in relation the operating cash flow statement?
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!
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" ?
thanks for the lessons
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! :)
Needed this right before finals, thank you so so much!
sir, could you explain how did you calculate the retained earnings in the balance sheet?
Ending Retained Earnings = Beginning Retained Earnings + Net Income (or minus Net Loss) - Dividends
Thanks! Your lectures are quiet useful!
Accounting noob question here. Why doesn't the purchase of equipment considered an expense and included included on the income statement like Operating Expenses?
+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!
how do you determine the net income if it is not given?
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!
Really good explanation, thank you! Better than my teacher who I pay thousands of dollars to teach me!
what grade are you guys in? im in the 9th trying to understand this lmao.
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
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.
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.
Dividend are not part of the Income Statement
I wish I had started to watch your videos before starting my accounting class. You are the best.
Happy to help!
i dont get why some numbers are negative or in bracket ?
Numbers in brackets indicate that the number is negative. For the Statement of Cash Flows, a negative number indicates that cash was used.
how did you get the payment of devidend?
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.
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.
Ha! My final exam is tomorrow (Saturday) at 8:00 AM. I'm in a panic. 😂
@@joshuasmith6950 7:30 AM here. Good luck!
if there is a change in inventory, where does it go?
You're my hero Edspira.
amazing explanations thanks once again for providing these videos with us.
No problem Delim. Thanks for watching!
Great video man
Thanks!
Why do you not mention interest payment and depreciation??
Check in the Financial Accounting section.
In a way the Increase in A/P are a credit line so a "hidden" CF financing within CF operation?
Who is watching this during their exam lol
your videos are always helpful. Thank you.
Thank you for the kind words my friend
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........
I'm in grad school for accounting, and still, I can barely understand these fucking things. Thanks for the help!
I still don't understand why the purchase of the equipment is -8000
modupe olukanni because u spent cash to buy equipment. It's a cash outflow
They didn't spend cash, he's wrong. It's not an outflow we know it's just in an increase in Payables.
Thank u so much It's help me to lot, will see it again
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
best video out there to help us understand the statement of cash flow, but how is issuance of stock increasing cash flow?
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.
sir I want to praise, your way of teaching is MashAllah very good, i have learned intory, now I am learning Cash Flow
#MashAllah
#MashAllah
#MashAllah
Thanks, very well explained and presented
Why the equipment purchase 0 out with AP? The AP should included the equipment purchase since this is paid by credit. Thank you.
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
You just pulled random fucking numbers out of nowhere
You are speaking my language.
Awesome. Thanks for watching!
You saved my Day ! Thank you so much !
No problem! Happy to help my friend :)
Always great lectures!
Thank you!
I LOVE YOU
😀
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!!!
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.
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?
Thank you!
No problem!
Very Easy to Understand ... Great illustration! ... Thank you for your presentation!
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
You made it so easy to follow without jamming up my brain!
can you help me build a statement of cash flows from forecasting
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.
I have the same thought as Tahir Garayev!! Is this truly correct??? Please tell me someone!!
Thank you for helping me a day before final exam
ง
เงินเยี่ยวยาจากรัฐบาล
thanks for the videos.. really helpfull.
Perfect
Thanks for confusing me
Thanks bruh
he sounds like seth rogen
this helped me so much
for cash flows from investing would it go there if it is a purchase and/or sale of land?