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Bond Issued At Premium Or Discount Deterimed By Bonds Present Value Of Cash Flows
 
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How to calculate the bond premium or bond discount based on the present value of a bond (issued) for both a bond issued at a discount and a bond issued at a premium, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual annuity type payments) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the discount or premium amount on the bond, both cases (bond premium versus bond discount) are demonstrated and calculated based on a cash flow diagram which includes the bonds future value (face value, maturity value) and interest payment amounts, using Excel present value function the cash flows are discounted back using the market rate of interest to determine a discount or premium amount on the bond (discount PV is less than face value while premium PV greater than face value of bond), must determine bond discount or premium for amortization of the bond used in accounting, detailed example by Allen Mursau
Views: 9834 Allen Mursau
Bond Issuance Examples
 
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Roger Philipp, CPA, CGMA, presents a basic bond issue with a face value of $1 million, term of 5 years, and stated or coupon rate of 8% in the video 11.01 - Bond Issuance Examples. He also shows the journal entries for issuance and interest payments at market rates or effective rates of 8%, then 10%, and then 6%. If the bond is issued to yield 8%, then the bond is issued at par and interest expense will equal the interest payment. If the effective interest rate is 10% then the bond is issued at a discount. Now interest expense will no longer equal the cash coupon interest paid. Roger explains how to set up the journal entry, keeping things simple for now with straight-line amortization of the bond discount. Roger continues the problem by showing in the journal entry how the issuer’s interest expense will equal the market rate of 10%. Finally, Roger walks through the journal entries for this 8% face rate bond issued at a premium with a yield of 6%. As an advanced bonus, Roger has us consider the effects of the bond interest payments on the statement of cash flows. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, next page it says issuance of bonds example and we're going to go through this example. Face value of the bonds, million dollars. Term, five year versus what? Term versus serial bond which matures in installments. Stated interest rate 8%. That's how much cash I'm going to get. I'm going to get 8% of a million dollars or $80,000 in cash but what am I earning? That's a different question. Then it says effective or market or yield is eight in example A, ten in example B, six in example C. Notice that we're going to be doing three examples. One is going to be eight, eight which is issued at par, issued at face. We don't have to worry about the discounted premium then we'll go to a discount example, then we'll go to a premium example and then life will be beautiful for you, things will make sense.
Views: 27159 Roger CPA Review
Bond Effective Interest Rate Defined, Calculated And Applied Bond Cash Flow flow
 
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How to calculate the effective interest (example for bond effective interest rate) and apply the effective interest rate to amortize a bond (could be for other types of investments as well), the effective interest rate is the rate of interest required to discount a cash flow (bond example) of future value of bond and its payments back to its present value at time its issued, once the effective interest rate is calculated it can be used to amortize the bond using the effective interest rate method, detailed example showing a cash flow diagram and using Excel IRR (internal rate of return) function to calculate the effective interest rate, using the interest rate a bond amortization schedule (how to apply effective interest rate) is shown based on the bond purchase price, face value, yeild to maturity, coupon rate and effective interest rate, complete accounting example with detailed calculations including basic journal entries for a bond amortization by Allen Mursau
Views: 3823 Allen Mursau
Bond Issued At Discount Versus Premium How To Calculate And Amortize The Bond
 
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Understand the dfference between a bond purchased (issued) at a discount versus a bond purchased (issued) at a premium, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines whether the bond is purchased (issued) at a discount or premium amount, for a discount (bonds PV is less than on the bonds face value) while for a premium(amount the PV is greater than its face value), detailed example comparing amortization schedules for bond discount versus bond premium, details cash interest payments (stated rate of interest x bond face value), interest expense (market rate x carrying value of bond outstanding debt), amortized interest expense (interest payment - interest expense),subtract amortized premium to the bonds carrying value to determine the bonds new carrying value (bond amortization),
Views: 34203 Allen Mursau
Excel Finance Class 57: Compare Cash Flows For a Coupon & A Zero Coupon Bond
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Compare Cash Flows For a Coupon & A Zero Coupon Bond and see why some prefer one over the other.
Views: 5688 ExcelIsFun
How to Price/Value Bonds - Formula, Annual, Semi-Annual, Market Value, Accrued Interest
 
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http://www.subjectmoney.com http://www.subjectmoney.com/definitiondisplay.php?word=Bond%20Pricing In this video we show you how to calculate the value or price of a bond. We teach you the present value formula and then use examples to discount the coupon payments and principle payment to their present value. We also show you how to solve the price of a semi-annual bond. In this case you would multiply the periods by two and divide the YTM and coupon payments by 2. We also show you how to solve the accrued interest of a bond to find out what it would sell for at a date that is not on the exact coupon payment date. https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=7zCqoED8MVk http://www.roofstampa.com hjttp://roofstampa.com http:/www.subjectmoney.com http://www.excelfornoobs.com
Views: 86600 Subjectmoney
Understanding "expected" cash flows from a bond
 
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Takes a look at three different bonds - Alibaba, Citigroup, and CVS Health Corp - to discuss the expected cash flows from each as on January 6, 2018.
Views: 42 S Roy
Formula for the Statement of Cash Flows
 
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This video discusses a formula that can be used to help create a Statement of Cash Flows. The formula is derived from the basis accounting equation and helps you figure out the effect of changes in accounts receivable, payables, etc. on the Statement of Cash Flows. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like Edspira on Facebook, visit https://www.facebook.com/Edspira To sign up for the newsletter, visit http://Edspira.com/register-for-newsletter Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin To follow Michael on Facebook, visit https://www.facebook.com/Prof.Michael.McLaughlin
Views: 3099 Edspira
Calculating Bond Issuance Proceeds
 
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What it the present value of a bond at issuance? Watch Roger Philipp, CPA, CGMA, use ‘present value’ as a verb as he explains the answer to the question in the video, 11.01 - Calculating Bond Issuance Proceeds. The face value of the bond is a lump sum, the coupon interest is an annuity. These are summed to find the present value of a bond at issuance. Use the effective interest rate to present value both the lump sum and the annuity! But is it an annuity due or an ordinary annuity due also known as annuity in arrears? In typical joking Roger fashion, Roger helpfully pats his own backside in order to demonstrate that an annuity in arrears is paid at the end of the year, which is the case with bond interest. Roger then shows how to handle the present value factor of an annuity for a bond that pays interest semi-annually instead of annually. What if the CPA Exam simply states a bond was issued at 101, or at 98? Roger explains what those numbers mean and how to calculate the bond issuance proceeds given only that information. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, how do you figure out how much to charge? How much cash should I charge you? How much cash should I charge you? How much cash should I charge you? Basically we're going to try to figure out what the carrying value or the amortized cost should be. In this case it’s a thousand net of a 100 is 900 which happens to be the cash. Here it happens to be a thousand which is a thousand. Here it happens to be a million one which is this plus this. Okay, there could be other factors that fall into that but we've got to figure out, okay, how much should the present value of the bonds be? When you’re present valuing the bonds, there are two things we need to present value. We need to present value the face and we need to present value the interest.
Views: 15286 Roger CPA Review
Completing the Cash Flow Statement
 
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This video shows you how to do a cash flow statement using the indirect method. You are given balance sheets and additional information to complete the cash flow statement. If you are looking for a refresher on the cash flow statement basics, please watch my other video on Cash Flow Basics. For more help with accounting, please visit my website http://AccountingInFocus.com.
Views: 6240 Kristin Ingram
Operating Activities of Cash Flow Statement | Financial Accounting | CPA Exam FAR | Ch 14 P 2
 
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This video covers the indirect method for preparing the operating section of cash flow statement or operating activities statement of cash flow. My website: https://farhatlectures.com/ Facebook page: https://www.facebook.com/accountingle... LinkedIn: https://goo.gl/Pp2ter Twitter: https://twitter.com/farhatlectures Email Contact: [email protected] While the FASB encourages the use of the direct method when preparing the statement of cash flows, use of the indirect method is also permitted. However, if the direct method is used the FASB requires that a reconciliation of net income to net cash flow from operating activities shall be provided in a separate schedule. Therefore, under either method, the indirect (reconciliation) approach must be presented. The text book includes comprehensive illustrations which provide a detailed explanation of the preparation and presentation of the statement of cash flows. 11. When non-cash current asset accounts increase and non-cash current liability accounts decrease, the change is subtracted from net income. When non-cash current asset accounts decrease, and non-cash current liability accounts increase, the change is subtracted from net income. Non-cash items such as depreciation, amortization, and losses are added to net income, while gains are subtracted. 12. The schedule shown below presents the common types of adjustments that are made to net income to arrive at net cash flow provided by operating activities under the indirect method. Additions to Net Income Depreciation expense. Amortization of intangibles and deferred charges. Amortization of bond discount. Increase in deferred income tax liability. Loss on investment in common stock using equity method. Loss on sale of plant assets. Loss on impairment of assets. Decrease in receivables. Decrease in inventories. Decrease in prepaid expenses. Increase in accounts payable. Increase in accrued liabilities. Deductions from Net Income Amortization of bond premium. Decrease in deferred income tax liability. Income on investment in common stock using equity method. Gain on sale of plant assets. Increase in receivables. Increase in inventories. Increase in prepaid expenses. Decrease in accounts payable. Decrease in accrued liabilities. Investing and Financing Activities 13. Investing activities include the analysis of all long-term asset accounts to determine any cash flow effects. The following are common investing cash flow effects, though non-cash effects may possibly cause the same effects in the long-term asset accounts. a. A purchase of land will appear as an increase in the land account and will appear as an investing cash outflow. b. A sale of land will appear as a decrease in the land account and will be reported as an investing cash inflow. However, the change in the land account is rarely the same amount as the cash flow effect, as a gain or loss may result. c. A purchase of a depreciable asset such as equipment or a building will appear as an increase in the equipment or building account and will appear as an investing cash outflow. d. A sale of a depreciable asset such as equipment or a building will appear as an decrease in the equipment or building account and a decrease in the accumulated depreciation account. The net book value change will rarely equal the cash flow effect, as a gain or loss will usually result. e. A sale of an investment in stock or bonds of another company will appear as a decrease in the investment account and will be reported as an investing cash inflow. However, a gain or loss often results from the sale that causes the cash flow amount to differ from the change in the long-term asset account. f. A purchase of an investment in stock or bonds of another company will appear as an increase in the investment account and will be reported as an investing cash outflow. 14. Financing activities include the analysis of all long-term liabilities, all stock accounts, dividends payable, and some short-term notes payable to determine any cash flow effects. The following are common financing cash flow effects, though non-cash effects may possibly cause the same effects in the respective accounts. a. An issuance of long-term debt, including bonds and notes payable, will appear as an increase in these accounts and will be reported as a financing cash inflow. b. A payment or liquidation of long-term bonds or notes payable will appear as a decrease in the long-term obligation accounts and will be reported as a financing cash outflow. However, the book value of the obligation must be considered as well (e.g., discounts and premiums.)
Bond Retirement
 
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In the video, 11.04 - Bond Retirement, Roger Philipp, CPA, CGMA, sets up the journal entry to retire a bond by first reviewing the initial issuance journal entry, then turning it around into a bond retirement journal entry. He discusses, Debit Bonds Payable, debit any unamortized premium or credit any unamortized discount, credit any unamortized bond issue costs and credit Cash for the amount paid to retire the bond. Please note that the plug will be the gain or loss. If the plug is a debit, it’s a loss on bond retirement; if the plug is a credit, it’s a gain on bond retirement. Roger also briefly covers bond sinking funds in this lesson. In the next lesson, it will be time to apply all this bond knowledge to working through questions! Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: All right, let's talk about bond retirement. So, we've talked about issuing a bond. And, remember issuing a bond. Credit bonds payable, accrued interest, cash, boom, boom. This is BIC, this is discount or premium. Now, early retirement of bonds. So what this says is, the bond may be called, it may be retired prior to once it matures. In other words, it's a five year bond, but two years in, they call it back. Basically, it's the opposite of the entry we just did. So, as we look through this, it's the opposite of the journal entry.
Views: 12558 Roger CPA Review
How to Amortize a Bond Discount
 
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This video explains how to account for bonds issued at a discount using the effective interest rate method for bond discount amortization. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 107268 Edspira
Cash Flow Statement (Basic Overview Of Financing Activities As Liabilities & Stockholders Equity)
 
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Accounting cash flow for financing activities (cash flow statement) basic overview, cash flow involving liabilities & stockholders equity (determine the change in cash), note that investments in stocks & bonds as AFS & HTM are held as assets & are investing activities & are not included in financing activities, the financing activity includes (1) long term liabilities (as debt) such as bonds payable, here you look at bonds issued vs bonds redeemed & interest payable on the bonds to determine if cash is provided or used, (2) (contributed capital) for stocks issued for cash vs stocks exchanged for investment in another company or for an asset (noncash exchange), must consider treasury stock buyback, (3) (earned capital), cash is concerned with dividends declared as a reduction to retained earnings, dividends declared as dividends payable vs a reduction to dividends payable which affects cash, discussion overview of cash flow by Allen Mursau
Views: 1557 Allen Mursau
Bond Cash Flows and Fully Amortizing Loans
 
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This video is part of a BlueBook Academy course: Introduction to Fixed Income Securities. BlueBook Academy is an online finance school to get people job ready, without debt and then help them find jobs. Start on a learning path, a selection of hand-picked certificates, designed to give you the essentials you need to land your dream job. Study towards exams and increase your chances of success with free tutorials, quizzes and extra learning resources. Or start on a specific course and earn an accredited certificate to add to your LinkedIn profile and CV. BlueBook Academy students have successfully landed their dream jobs at Accenture, Morgan Stanley, Citigroup, KPMG and many more. We've been featured at the QS-Wharton Reimagine Education Awards and the UK National Undergraduate Employability Awards. Learn for free - get certified - land your dream job. Join our fast growing community of learners at bluebookacademy.com
Views: 289 BlueBookAcademy.com
Statement of Cash Flows - Lesson 2
 
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In this video, 25.01 – Statement of Cash Flows – Lesson 2, Roger Philipp, CPA, CGMA, has a discussion on the statement of cash flows, mainly that all cash inflows and outflows are categorized as operating, investing, or financing activities. Roger goes into detail on the definitions of operating, investing, and financing activities, providing examples for all. He tells us to remember that interest paid and interest received are both considered operating activities under US GAAP, though IFRS is different. And that dividends received are an operating cash inflow, but dividends paid are a financing cash outflow, because they are considered distributions to owners. Roger does some journal entries on the whiteboard to help show both sources and uses of cash on the statement of cash flows. Then Roger explains how journal entries help to reconcile between accrual accounting and cash flow, going into different scenarios and angles: maybe there was interest expense, but it wasn’t all cash, because some of it was amortization of bond discount; maybe there was depreciation expense, but it was all accumulated amortization, and no cash. Find out what Roger’s conclusions are, and don’t miss another handy mnemonic that is LIP for investing activities – Loans, Investments, Property. Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now as I said, we have operating activities. What are operating activities? "In-flows and out-flows related to production of income from continuing operations". So it says, "All transactions that are not investing or financing". Are what? Operating, so everything kind of falls into this category if it's not investing or financing which are very carefully defined. So for example, collections on sales from customers. As you make a sale, we'll do lots of journal entries, I'm going to debit cash, credit sales. That would be collection from sales. Let's say I collect an account receivable. I might have an account receivable here I'm setting it up. Then later I collect it, debit cash, and credit AR. Collections on sales from customers, payments for cost of goods sold and SG&A. Interest received and paid, circle that. Interest received, interest paid. Interest received, interest paid is what? Operating under GAAP. It's going to be different under IFRS so that's important, but for now let's just study GAAP. Dividends received are also operating because most companies buy stocks, bonds and so on as a normal part of operations with their extra cash. They are just putting the cash somewhere to make money. Acquisition or disposal of trading securities. Payments for taxes. Taxes, normal part of business, operating activity. Payments for taxes, all other receipts and disbursements that do not stem from investing or financing are also operating. So as we go through we are going to be doing a lot of journal entries and basically, if you debit cash that's a cash in-flow, a source. If you debit, let's say you have some kind of expense and we credited cash, that would be an out-flow, cash going out. A statement of cash flows, you know, normally we're doing accrual accounting. Here, let's take accrual and go back to cash. We're going to be doing some reconciling between accrual and cash because we've got to figure out, how much of this transaction was actually cash? Maybe there was interest expense, but it wasn't all cash because some of it was amortization of bond discount or premium, hhmmm. We have depreciation expense but it wasn't cash because it was accumulated amortization. So that's where we have to kind of go through and see what the journal entries were to figure them out. Now, FASB very carefully defines investing activities and financing activities. Investing activities you can think of this, don't give me any lip. So when I talk about lip, what does that mean? That is going to be things like loans, investments and investments like property, plant and equipment, investing in yourself. When we talk about this, PP&E or fixed assets or intangibles, that would be investing. So think of investing as you are investing in the company. You are making an investment in the company or you are making an investment outside the company, buying securities, but you are still investing some money. It says, "Investing principal collections or loans made by the entity," but remember interest and dividends are what? Operating. "Acquisition or disposal of available for sale or held to maturity". Those would be investments.
Views: 21015 Roger CPA Review
Excel Finance Class 46: Bonds: Just Set Of Cash Flows Discounted At Market Rate, Coupon or Zero
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Learn how to think of a Bond as just a set of future cash flows that are discounted at a market rate. See examples of both a Coupon Bond and a Zero Coupon Bond. Learn About Yield To Maturity rates. See Math Formulas for Bond Valuation and PV function in Excel for both Coupon Bond and Zero Coupon Bond.
Views: 10069 ExcelIsFun
Cash Flows Statement under Direct Method | Statement of Cash Flows | Financial Statement |Accounting
 
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What is Cash Flow Statement? Cash Flow Statement is a statement which reports • cash receipts, • cash payments, and • net change in cash. A statement of cash flows indicates: • where the company’s cash comes from and • how the company uses its cash. Cash Flow Statement shows cash flows from: • Operating activities, • Investing activities, and • Financing activities. What are the usefulness of Cash Flow Statement? Cash Flow Statement is prepared with a view to: 1. Knowing the entity’s ability in generating future cash flows 2. Knowing the entity’s ability to pay dividends 3. Knowing the entity’s ability to meet obligations 4. Identifying the reasons for the difference between net income and net cash flow from operating activities. 5. Knowing the amount of assets increased or decreased during the period by investing activities 6. Knowing the amount of liabilities increased or decreased during the period by financing activities Classification of cash flows: 1. Operating activities involve income statement items. 2. Investing activities involve cash flows resulting from changes in investments and long-term asset items. 3. Financing activities involve cash flows resulting from changes in long-term liability and stockholders’ equity items. Three sources of information to prepare cash flow statement: 1. Comparative balance sheets (two years balance sheet) 2. Current year income statement data 3. Additional detailed information (to determine how the company provided or used cash during the period) Non-Cash Items which should not be included in cash flow statement: 1. Direct issuance of common stock to purchase assets. 2. Conversion of bonds into common stock. 3. Direct issuance of debt to purchase assets. 4. Exchanges of plant assets. The above non-cash items are reported separately at the bottom of the statement of cash flows. The sum of the operating, investing, and financing sections equals the net increase or decrease in cash for the period. This amount is added to the beginning cash balance to arrive at the ending cash balance—the same amount reported on the balance sheet. To calculate cash flows from operating activities, we need to analyze the current year's income statement as well as current assets and liabilities from comparative balance sheets and selected additional data. To calculate cash flows from investing activities, we need to analyze the Long Term Assets items from the comparative balance sheet and selected additional data. To calculate cash flows from financing activities, we need to analyze the Equity items from the comparative balance sheet and selected additional data. Indirect and Direct Methods In order to calculate CASH FLOWS FROM OPERATING ACTIVITIES, a company must convert net income from an accrual basis to a cash basis. This conversion may be done by either of two methods: (1) Indirect method or (2) Direct method. Both methods arrive at the same total amount for “Net cash provided by operating activities.” They differ in how they arrive at the amount. The indirect method adjusts net income for items that do not affect cash. The direct method shows operating cash receipts and payments, making it more consistent with the objective of a statement of cash flows. So, in this tutorial we will learn how to prepare Cash Flow Statement under direct method. Under the direct method, companies compute net cash provided by operating activities by adjusting each item in the income statement from the accrual basis to the cash basis.
Views: 21411 Md. Azim
Cash Flow From Financing Activities (Formula & Example) | Calculation
 
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In this video we are going to discuss Cash flow from Financing Activities in detail. Including some examples and calculation. 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬 -------------------------------------------------------------- This reports the issuance and repurchase of the firm's own bonds and stock itself and also the payment of dividends. It also reports the transactions of capital structure. 𝐈𝐭𝐞𝐦𝐬 𝐢𝐧 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐟𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬 ------------------------------------------------------------------------------- 1. Reduction in short-term borrowings (cash outflow) 2. Sales of Shares (cash inflows) 3. Repurchase of shares 4. Expansion in short-term borrowings 5. Cash dividend paid (cash outflow) 6. Repay of long-term borrowings (cash outflow) To know more about 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/cash-flow-financing-activities/
Views: 267 WallStreetMojo
Bond Issued At Discount Affect On Bond Interest Expense Recognized (Income Statement)
 
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Examine how bond issued (purchased) at a discount affects recognized interest expense on Income Statement , bond issued at a discount (price received for bond is less than face value of bond the difference is the discounted amount) includes two different interest components, (1) regular stated rate of interest payment plus (2) amortized amount of discount on the bond for each period, example demonstrates the accounting required for a discounted bond shown on a balance sheet template, bonds payable, discount bonds payable (contra account), interest payable, and interest expense, cash flow diagram details the cash flows calculating the additional interest expense that has to be amortized over the life of the bond and added to the regular interest payments which increases the interest expense recognized on the income statement, accounting detailed thru (Taccounts) on the balance sheet by Allen Mursau
Views: 2591 Allen Mursau
Discounts, Premiums and Bonds at Par (Intermediate Financial Accounting Tutorial #12)
 
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Before we moved onto valuing and reporting long term bonds I thought that I would provide a quick summary of bonds issued at a discount, premium or at par. The stated rate is also known as the coupon rate, or face rate. The market rate is also known as the effective rate and is the rate at which you can get other very similar or identical financial instruments (for example, a bond may have been issued at a 4% coupon rate, 1 year later the market rate for those bonds might have shifted to 6%). Website: http://www.notepirate.com Follow us on Facebook: https://www.facebook.com/pages/Note-Pirate/514933148520001?ref=hl Follow us on Twitter: https://twitter.com/notepirate We appreciate all of the support you guys have given us. Be apart of the mission to help us reach more students by subscribing, thumbs upping and adding the videos to your favorites! ** Notepirate is privately owned and exclusive to Notepirate.com.**
Views: 33746 Notepirate
Bond Issued At Premium Accounting Detailed With Balance Sheet Journal Entries
 
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How to record a bond issued at a premium on the balance sheet and income statement, detailed journal entries (T account form), amortize a bond issued at a premium (present value greater than face value of bond) using the effective interest rate method, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the premium amount on the bond (amount the PV is greater than its face value), the premium amount has to be amortized over the life of the bond using an amortization schedule, detailed example showing how to setup amortization schedule and use the schedule to amortize the bond premium, detailed calculations with accounting journal entries (T accounts)on balance sheet template for bond payable, premium on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense),subtract amortized premium to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed calculations and accounting by Allen Mursau
Views: 6670 Allen Mursau
Statement of Cash Flows | Intermediate Accounting | CPA Exam FAR | Chp 5 p 2
 
01:00:46
cash flow statement tutorial, cash flow statement explained, cash flow statement analysis, cash flow statement direct method, how to prepare cash flow statement, cash flow statement direct vs indirect, cash flow statement direct vs indirect, Cash flow statement FAR, Financial Accounting Reporting,FAR,FAR CPA Review,FAR CPA Exam,FAR CPA Lectures, Roger CPA FAR,CPA Exam FAR Tips, ,how to pass the CPA exam,how to study for the cpa exam,becker,cpa exam,cpa, CPA exam Tutor,CPA exam Tutoring, video, FAR video, Free FAR video The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Classification of Cash Flows 3. The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include all transactions and events that are not investing and financing activities. Operating activities include the cash effects of transactions that enter into the determination of net income, such as cash receipts from sales of goods and services, and cash payments to suppliers and employees for acquisitions of inventory and expenses. Operating activities involve income determination items. 4. Investing activities include (a) making and collecting loans, and (b) acquiring and disposing of investments and productive long-lived assets. Investing activities involve cash flows generally resulting from changes in long-term asset items. 5. Financing activities involve liability and stockholders’ equity items and include (a) obtaining cash from creditors and repaying the amounts borrowed, and (b) obtaining capital from owners and providing them with a return on, and return of, their investment. Financing activities involve cash flows generally resulting from changes in long-term liability and stockholders’ equity items. 6. The typical cash receipts and cash payments of a business entity classified according to operating, investing, and financing activities are shown below. Operating Activities Cash inflows From sales of goods or services. From returns on loans (interest) and on equity securities (dividends). Cash outflows To suppliers for inventory. To employees for services. To government for taxes. To lenders for interest. To others for expenses. Investing Activities Cash inflows From sale of property, plant, and equipment. From sale of debt or equity securities of other entities. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Financing Activities Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows To stockholders as dividends. To redeem long-term debt or reacquire capital stock.
Bond Amortization Schedule Effective Interest Rate Method Accounting (Bond Discount)
 
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How to amortize a bond issued at a discount (present value less than face value of bond) using the effective interest rate method, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the discount amount on the bond (amount the PV is less than its face value), the discount amount has to be amortized over the life of the bond using an amortization schedule, detailed example showing how to setup amortization schedule and use the schedule to amortize the bond discount, detailed calculations with accounting journal entries (T accounts)on balance sheet template for bond payable, discount on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense), add amortized discount to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed calculations and accounting by Allen Mursau
Views: 51361 Allen Mursau
What is a Bond | by Wall Street Survivor
 
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What is a bond? Learn more at: https://www.wallstreetsurvivor.com A bond is a debt investment in which an investor loans money to a corporate entity or government. The funds are borrowed for a defined period of time at either a variable or fixed interest rate. If you want a guaranteed money-maker, bonds are a much safer option than most. There are many times of bonds, however, and each type has a different risk level. Unlike stocks, which are equity instruments, bonds are debt instruments. When bonds are first issued by the company, the investor/lender typically gives the company $1,000 and the company promises to pay the investor/lender a certain interest rate every year (called the Coupon Rate), AND, repay the $1,000 loan when the bond matures (called the Maturity Date). For example, GE could issue a 30 year bond with a 5% coupon. The investor/lender gives GE $1,000 and every year the lender receives $50 from GE, and at the end of 30 years the investor/ lender gets his $1,000 back. Bonds di er from stocks in that they have a stated earnings rate and will provide a regular cash flow, in the form of the coupon payments to the bondholders. This cash flow contributes to the value and price of the bond and affects the true yield (earnings rate) bondholders receive. There are no such promises associated with common stock ownership. After a bond has been issued directly by the company, the bond then trades on the exchanges. As supply and demand forces start to take effect the price of the bond changes from its initial $1,000 face value. On the date the GE bond was issued, a 5% return was acceptable given the risk of GE. But if interest rates go up and that 5% return becomes unacceptable, the price of the GE bond will drop below $1,000 so that the effective yield will be higher than the 5% Coupon Rate. Conversely, if interest rates in general go down, then that 5% GE Coupon Rate starts looking attractive and investors will bid the price of the bond back above $1,000. When a bond trades above its face value it is said to be trading at a premium; when a bond trades below its face value it is said to be trading at a discount. Understanding the difference between your coupon payments and the true yield of a bond is critical if you ever trade bonds. Confused? Don't worry check out the video and head over to http://courses.wallstreetsurvivor.com/invest-smarter/
Views: 132083 Wall Street Survivor
Overview & Purpose of Statement of Cash Flows | Intermediate Accounting | CPA Exam FAR | Chp 23 p 1
 
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cash flow statement tutorial, cash flow statement explained, cash flow statement analysis, cash flow statement direct method, how to prepare cash flow statement, cash flow statement direct vs indirect, cash flow statement direct vs indirect, Cash flow statement FAR, Financial Accounting Reporting,FAR,FAR CPA Review,FAR CPA Exam,FAR CPA Lectures, Roger CPA FAR,CPA Exam FAR Tips, ,how to pass the CPA exam,how to study for the cpa exam,becker,cpa exam,cpa, CPA exam Tutor,CPA exam Tutoring, video, FAR video, Free FAR video The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Classification of Cash Flows 3. The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include all transactions and events that are not investing and financing activities. Operating activities include the cash effects of transactions that enter into the determination of net income, such as cash receipts from sales of goods and services, and cash payments to suppliers and employees for acquisitions of inventory and expenses. Operating activities involve income determination items. 4. Investing activities include (a) making and collecting loans, and (b) acquiring and disposing of investments and productive long-lived assets. Investing activities involve cash flows generally resulting from changes in long-term asset items. 5. Financing activities involve liability and stockholders’ equity items and include (a) obtaining cash from creditors and repaying the amounts borrowed, and (b) obtaining capital from owners and providing them with a return on, and return of, their investment. Financing activities involve cash flows generally resulting from changes in long-term liability and stockholders’ equity items. 6. The typical cash receipts and cash payments of a business entity classified according to operating, investing, and financing activities are shown below. Operating Activities Cash inflows From sales of goods or services. From returns on loans (interest) and on equity securities (dividends). Cash outflows To suppliers for inventory. To employees for services. To government for taxes. To lenders for interest. To others for expenses. Investing Activities Cash inflows From sale of property, plant, and equipment. From sale of debt or equity securities of other entities. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Financing Activities Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows To stockholders as dividends. To redeem long-term debt or reacquire capital stock.
Bonds & Bond Valuation | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 1
 
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When a corporation or government wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that are generically called bonds. In this section, we describe the various features of corporate bonds and some of the terminology associated with bonds. We then discuss the cash flows associated with a bond and how bonds can be valued using our discounted cash flow procedure. BOND FEATURES AND PRICES As we mentioned in our previous chapter, a bond is normally an interest-only loan, meaning that the borrower will pay the interest every period, but none of the principal will be repaid until the end of the loan. For example, suppose the Beck Corporation wants to borrow $1,000 for 30 years. The interest rate on similar debt issued by similar corporations is 12 percent. Beck will thus pay .12 × $1,000 = $120 in interest every year for 30 years. At the end of 30 years, Beck will repay the $1,000. As this example suggests, a bond is a fairly simple financing arrangement. There is, however, a rich jargon associated with bonds, so we will use this example to define some of the more important terms. In our example, the $120 regular interest payments that Beck promises to make are called the bond’s coupons. Because the coupon is constant and paid every year, the type of bond we are describing is sometimes called a level coupon bond. The amount that will be repaid at the end of the loan is called the bond’s face value, or par value. As in our example, this par value is usually $1,000 for corporate bonds, and a bond that sells for its par value is called a par value bond. Government bonds frequently have much larger face, or par, values. Finally, the annual coupon divided by the face value is called the coupon rate on the bond; in this case, because $120/1,000 = 12%, the bond has a 12 percent coupon rate. The number of years until the face value is paid is called the bond’s time to maturity. A corporate bond will frequently have a maturity of 30 years when it is originally issued, but this varies. Once the bond has been issued, the number of years to maturity declines as time goes by. BOND VALUES AND YIELDS As time passes, interest rates change in the marketplace. The cash flows from a bond, however, stay the same. As a result, the value of the bond will fluctuate. When interest rates rise, the present value of the bond’s remaining cash flows declines, and the bond is worth less. When interest rates fall, the bond is worth more. To determine the value of a bond at a particular point in time, we need to know the number of periods remaining until maturity, the face value, the coupon, and the market interest rate for bonds with similar features. This interest rate required in the market on a bond is called the bond’s yield to maturity (YTM). This rate is sometimes called the bond’s yield for short. Given all this information, we can calculate the present value of the cash flows as an estimate of the bond’s current market value.
Bond Discount Amortization Schedule (How To Setup And Use)
 
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How to amortize a bond issued (purchased) at a discount (present value less than face value of bond) using bond amortization schedule (using effective interest rate method), bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the discount amount on the bond (amount the PV is less than its FV), the discount amount has to be amortized over the life of the bond using an amortization schedule, detailed example showing how to setup amortization schedule and use the schedule to amortize the bond discount, detailed calculations for bond payable, discount on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense), add amortized discount to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed step by step calculations and use for accounting by Allen Mursau
Views: 11079 Allen Mursau
Statement of Cash Flows--Introduction | Financial Accounting | CPA Exam FAR | Chp 16 p 1
 
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Purpose and Usefulness of the Statement of Cash Flows 2. (L.O. 1) The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Classification of Cash Flows 3. The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include all transactions and events that are not investing and financing activities. Operating activities include the cash effects of transactions that enter into the determination of net income, such as cash receipts from sales of goods and services, and cash payments to suppliers and employees for acquisitions of inventory and expenses. Operating activities involve income determination items. 4. Investing activities include (a) making and collecting loans, and (b) acquiring and disposing of investments and productive long-lived assets. Investing activities involve cash flows generally resulting from changes in long-term asset items. 5. Financing activities involve liability and stockholders’ equity items and include (a) obtaining cash from creditors and repaying the amounts borrowed, and (b) obtaining capital from owners and providing them with a return on, and return of, their investment. Financing activities involve cash flows generally resulting from changes in long-term liability and stockholders’ equity items. 6. The typical cash receipts and cash payments of a business entity classified according to operating, investing, and financing activities are shown below. Operating Activities Cash inflows From sales of goods or services. From returns on loans (interest) and on equity securities (dividends). Cash outflows To suppliers for inventory. To employees for services. To government for taxes. To lenders for interest. To others for expenses. Investing Activities Cash inflows From sale of property, plant, and equipment. From sale of debt or equity securities of other entities. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Financing Activities Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows To stockholders as dividends. To redeem long-term debt or reacquire capital stock. 7. Some cash flows relating to investing or financing activities are classified as operating activities. For example, receipts of investment income (interest and dividends) and payments of interest to lenders are classified as operating activities. Conversely, some cash flows relating to operating activities are classified as investing or financing activities. For example, the cash received from the sale of property, plant, and equipment at a gain, although reported in the income statement, is classified as an investing activity, and the effect of the related gain is not included in net cash flow from operating activities. Likewise a gain or loss on the payment of debt is generally part of the cash outflow related to the repayment of the principal amount borrowed and, therefore, is a financing activity. Preparing the Statement of Cash Flows 8. (L.O. 2) The information used to prepare the statement of cash flows generally comes from three major sources: (a) comparative balance sheets, (b) the current income statement, and (c) selected transaction data. Actual preparation of the statement of cash flows involves three steps: a. Determine the change in cash. The difference between the beginning and ending cash balance can be easily computed from an examination of the comparative balance sheets. b. Determine the net cash flow from operating activities. This procedure involves analyzing not only the current year’s income statement, but also comparative balance sheets, as well as selected transaction data. c. Determine the net cash flows from investing and financing activities. All other changes in the balance sheet accounts must be analyzed to determine their effect on cash. operating, investing, financing, operating activities, financing activities, investing activities, cash flows statement, statement of cash flow, financial statement, cash inflow, cash outflow, net cash used, net cash provided, non cash activities, direct method of cash flow, indirect method of cash flow, cash flow to total assets,
Journal Entries for Bond Issuance
 
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This is the fourth video in the bond series. In this video, I review how to record the journal entries needed to record bond issuance under three different circumstances: par, premium and discount. I use the same figures used throughout the rest of the bond videos. For more help with accounting, please visit my website http://AccountingInFocus.com.
Views: 11186 Kristin Ingram
Bond Amortization Using Straight Line Method (Issued At  Premium) Accounting & J/E's
 
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How to amortize a bond issued (purchased) at a premium (present value greater than face value of bond) using straight line amortization method (straight line amortization schedule), bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the premium amount on the bond (amount the PV is less than its face value) the premium amount has to be amortized over the life of the bond using the straight line amortization schedule (premium amont divided by number of periods), detailed example showing how to setup amortization schedule and use the schedule to amortize the bond premium, detailed calculations for bond payable, discount on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment + interest expense), add amortized discount to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed step by step calculations and use for accounting by Allen Mursau
Views: 5813 Allen Mursau
bonds cash flow 2
 
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Views: 48 Yashpreet Singh
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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Premium Course: https://www.teachexcel.com/premium-courses/68/idiot-proof-forms-in-excel?src=youtube Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial will show you how to calculate bond pricing and valuation in excel. This teaches you how to do so through using the NPER() PMT() FV() RATE() and PV() functions and formulas in excel. To follow along with this tutorial and download the spreadsheet used and or to get free excel macros, keyboard shortcuts, and forums, go to: http://www.TeachMsOffice.com
Views: 181852 TeachExcel
Make Cash Flow Statement in Excel
 
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Learn How to make Cash Flow Statement in excel by understanding the Components cashflow . The cash flow statement components provide a detailed view of cash flow from operations, investing, and financing: Cash Flow from Operating Activities The net amount of cash coming in or leaving from the day to day business operations of an entity is called Cash Flow From Operations. Basically it is the operating income plus non-cash items such as depreciation added. Since accounting profits are reduced by non-cash items (i.e. depreciation and amortization) they must be added back to accounting profits to calculate cash flow. Cash flow from operations is an important measurement because it tells the analyst about the viability of an entities current business plan and operations. In the long run, cash flow from operations must be cash inflows in order for an entity to be solvent and provide for the normal outflows from investing and finance activities. Cash Flow From Investing Activities Cash flow from investing activities would include the outflow of cash for long term assets such as land, buildings, equipment, etc., and the inflows from the sale of assets, businesses, securities, etc. Most cash flow investing activities are cash out flows because most entities make long term investments for operations and future growth. Cash Flow From Finance Activities Cash flow from finance activities is the cash out flow to the entities investors (i.e. interest to bondholders) and shareholders (i.e. dividends and stock buybacks) and cash inflows from sales of bonds or issuance of stock equity. Most cash flow finance activities are cash outflows since most entities only issue bonds and stocks occasionally. Cash Flow Statement Format Operating Activities: Net Income Depreciation and Amortization +/- One Time Adjustments (i.e. investment gains or losses not related to operations, deferred taxes, stock compensation) +/- Changes in Working Capital Cash Flow From Operations Investing Activities: +/- Net Capital Expenditures +/- Net Investments Cash Flow From Investing Activities Financing Activities – dividends +/- sale or purchase of company stock +/- net borrowings Cash Flow From Financing Activities Summary of Cash Flow Activities: +/- Cash Flow From Operating Activities +/- Cash Flow From Investing Activities +/- Cash Flow From Financing Activities Net Change in Cash Beginning Cash Balance Ending Cash Balance Note: You should be able to reconcile the Net Change in Cash with the cash balances reported on the Balance Sheet. Investment Analysis Summary The cash inflows and cash outflows in the cash flow statement are segmented into cash flow from operations, investing, and financing. These details provide insight in the liquidity and solvency, as well the entities ability to meet future needs for capital and growth. ** Useful Excel formulas and Functions ** 10 Most Used Formulas MS Excel https://www.youtube.com/watch?v=KyMj8HEBNAk Learn Basic Excel Skills For Beginners || Part 1 https://www.youtube.com/watch?v=3kNEv3s8TuA 10 Most Used Excel Formula https://www.youtube.com/watch?v=2t3FDi98GBk **Most Imporant Excel Formuls Tutorials** Learn Vlookup Formula For Beginners in Excel https://www.youtube.com/watch?v=vomClevScJQ 5 Excel Questions Asked in Job Interviews https://www.youtube.com/watch?v=7Iwx4AMdij8 Create Speedometer Chart In Excel https://www.youtube.com/watch?v=f6c93-fQlCs Learn the Basic of Excel for Beginners || Part 2 https://www.youtube.com/watch?v=qeMSV9T1PoI Create Pareto Chart In Excel https://www.youtube.com/watch?v=2UdajrDMjRE How to Create Dashboard in Excel https://www.youtube.com/watch?v=RM8T1eYBjQY Excel Interview Questions & Answers https://www.youtube.com/watch?v=Zjv1If63nGU To watch more videos and download the files visit http://www.myelesson.org To Buy The Full Excel Course visit . http://www.myelesson.org/product or call 9752003788 Connect with us on Facebook - https://www.facebook.com/excelmadeasy/ Connect with us on Twitter - https://twitter.com/Excelmadeasy
Views: 4022 My E-Lesson
Zero Coupon Bond Issued At Discount Amortization And Accounting Journal Entries
 
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Accounting for a zero coupon bond issued at a discount (issue price less than face value) interest calculation and balance sheet recording, start with a cash flow diagram, face (maturity) value, no stated rate of interest on bond and no interest payments (usually semi-annual), discount the face (maturity) value using the market rate of interest to the issue (purchase) date to determine its present value (purchase price) the difference between the face value (FV) and its present value (PV) equals the discounted amount which equals the profit or expense, the discounted amount has to be amortized to determine the interest payable (receivable) and interest expense (revenue) recognized, the amortization schedule is calculated as (market rate of interest x beginning carrying value = amortized interest, add to beginning carrying value to determine new carrying (book) value, detailed calculations with balance sheet journal entries for bond payable (receivable), discount bond payable (receivable), interest expense (revenue), etc., by Allen Mursau
Views: 5281 Allen Mursau
Module 11, Video 1 - Statement of Cash Flows
 
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Go to: http://www.accountingworkbook.com/ to download the problems. Module 11 examines the statement of cash flows. This is one of the most complex topics of an introductory accounting class, we learn to classify cash flows as operating, investing, or financing, and we learn how changes in asset, liability, and equity accounts effect cash flows.
Views: 11124 Tony Bell
Bond Issue (Bond Issued Between Interest Dates, Amortized, Accrued Interest, Interest Expense)
 
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Accounting for a bond issued between interest payment dates, allocating the interest expense based on issue date and the stated date of the bond, example: Corp-A issued $900,000 of 12%, 10-year bonds on (5/1/20X1), at 106 (106% of par), interest is payable semi-annually on (7/1) and (1/1), Corp-A uses the Straight-Line Method of amortization for bond premium or discount, Straight-Line Method amortizes a constant amount each interest period (10 yrs x 2 x yr = 20 semi-annual payments), Total months (10 yrs x 12 mths = 120 mths), Amortized mths (120 mths - 4 mths issued = 116 mths amort.), Actual amortized since Bond issued 4 mths after stated date: (Bond stated date 1/1/20X1, issued on 5/1/20X1), (1) Buyers of bonds pay seller interest accrued from the last interest pmt date (1/1/X1) to the date of issue (5/1/X1), On the next semi-annual interest payment date, buyer will receive the full semi-annual interest payment (7/1/X1), detailed accounting by Allen Mursau
Views: 7755 Allen Mursau
Bond Amortization Using Straight Line Method (Issued At  Discount) Accounting & J/E's
 
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How to amortize a bond issued (purchased) at a discount (present value less than face value of bond) using straight line amortization method (straight line amortization schedule), bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the discount amount on the bond (amount the PV is less than its FV), the discount amount has to be amortized over the life of the bond using the straight line amortization schedule (discount amont divided by number of periods), detailed example showing how to setup amortization schedule and use the schedule to amortize the bond discount, detailed calculations for bond payable, discount on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense), add amortized discount to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed step by step calculations and use for accounting by Allen Mursau
Views: 12045 Allen Mursau
Zero Coupon Bond : Cash Flow Scenarios : CT1 Financial Mathematics : Actuaries
 
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2.1 A zero-coupon bond The term “zero-coupon bond” is used to describe a security that is simply a contract to provide a specified lump sum at some specified future date. For the investor there is a negative cashflow at the point of investment and a single known positive cashflow on the specified future date. For example the investor may give the issuer of the zero-coupon bond £400,000, and in return the investor will receive £500,000 from the issuer in exactly 5 years’ time. The issuer may be a government or a large company. The positive cashflow is paid on a set date and is of a set amount, but it is not certain that the payment will be made. There is a chance that the issuing organisation will not make the payment, ie that it will default. This risk is usually negligible for bonds issued by governments of developed countries, since the government can always raise taxes. The risk of default is greater for issuing organisations that may go bust, eg companies. You can think of a zero-coupon bond as a loan from the investor to the issuer. The loan is repaid by one single payment of a fixed amount at a fixed date in the future. It is a special case of a fixed-interest security with no interest payments before redemption. We will study fixed-interest securities in the next section. We can plot the cashflows of the investor on a timeline: These cashflows could be shown on a timeline as: Cashflows £400,000 –£500,000 Time 0 5 The investor may also be referred to as the lender, and the issuer may be referred to as the borrower.
Views: 526 sangram singh
Explanation of Cash Flows, Stocks, & Bonds
 
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This is a video presentation over some of the main concepts discussed in a Financial Management course.
Views: 104 TheRoyRoberts
Accounting 2 - ACCT 122 - Program #216 - Intro to the Cash Flow Statement
 
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Accounting 2 - ACCT 122 - Program #216 - Intro to the Cash Flow Statement
Views: 21411 JCCCvideo
Statement of Cash Flows: Direct Method - Lesson 2
 
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In this video, 25.03 – Statement of Cash Flows: Direct Method – Lesson 2, ever wonder what effect an increase in accounts receivable has on the statement of cash flows? Or how about an increase in accounts payable and an increase in inventory and how do those affect the statement of cash flows? Find out in this thrilling video! Continuing from the statement of cash flows example set up in Lesson 1, Roger Philipp, CPA, CGMA, provides several changes to balance sheet accounts during the year and shows us how to analyze these changes for their effects on operating activities cash flows. He sets up the T-accounts for these balance sheet accounts on the whiteboard, continually reinforcing basic accounting concepts such as debits increasing assets and credits increasing liabilities. Next, he applies the direct method for calculating cash flows to the increase in accounts receivable, using Sales from the income statement to set up the journal entry to solve for operating cash flows resulting from cash collections from customers. Finally, the direct method is applied to the increases in accounts payable and inventory, which are set up in a summarizing journal entry with Cost of Goods Sold from the income statement to solve for cash flows from payments for purchases. Stay tuned for more direct method magic in the next lesson! Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, it mentions here selected balance sheet account changes. And you'll see here, for example, accounts receivable. Now, it's important to know, it says increase or decrease. If it's an asset, it goes up, then that would be a debit. So, what this means is during the year, this account changed by $80. Now, I'm going to put it here as a debit to 80 cause, that's an increase. We're going to have to figure out what goes here to cause the change. Now receivables would go up because you had sales that weren't collected in cash. Hmm, so that would mean some of the sales may not have been cash. They may have been an IOU called a receivable. We have increase in investment under equity method. So that would be your investment under the equity method. So that would go up by 10 that went up by 10. We've got an increase in inventory of 30. So, we have inventory, 30. And again, this isn't the balance it's the change. We have accounts payable, which went up by 20.
Views: 25156 Roger CPA Review
Business Activities: Operating, Investing and Financing (Financial Accounting Tutorial #4)
 
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75% OFF the Full Crash Course on Udemy: http://bit.ly/2oZIdcP In this tutorial we discuss the various business activities a company encounters on a day to day basis. The activities of any company can be sorted into either operating, investing or financing activities. Operating normally has to do with current assets/current liabilities or working capital along with expenses and revenues. Investing activities involve long term or non-current assets like the purchase and sale of capital assets like property or investments (some examples). Financing activities involve non-current liabilities and equity accounts. The issuance of more shares to raise cash or the issuance of a dividend or repayment of bonds are all prime examples. Watch the video to get a basic idea as to how business activities are split into these three sections! Leave a comment or question if you have any trouble understanding the concept! ** NotePirate is privately owned and exclusive to NotePirate.com** Website: http://www.notepirate.com Follow us on Facebook: https://www.facebook.com/pages/Note-Pirate/514933148520001?ref=hl Follow us on Twitter: http://twitter.com/notepirate
Views: 28773 Notepirate
Bond Issued At Premium Affect On Bond Interest Expense Recognized (Income Statement)
 
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Examine how bond issued (purchased) at a premium affects recognized interest expense on Income Statement, bond issued at a premium (price received for bond is greater than face value of bond the difference is the premium amount) includes two different interest components, (1) regular stated rate of interest payment plus (2) less amortized amount of premium on the bond for each period, example demonstrates the accounting required for a discounted bond premium shown on a balance sheet template, bonds payable, premium bonds payable, interest payable, and interest expense, cash flow diagram details the cash flows calculating the interest expense that has to be amortized over the life of the bond and subtracted to the regular interest payments which decreases the interest expense recognized on the income statement, accounting detailed thru (Taccounts) on the balance sheet by Allen Mursau
Views: 1460 Allen Mursau
13 -- Bonds Issued Between Interest Dates and Retirement
 
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An overview of bonds issued between interest dates and retirement, to accompany http://www.principlesofaccounting.com Chapter 13, Long-Term Obligations. *Check out the Classroom page to find out how to take this course for credit: http://www.principlesofaccounting.com/classroom.html
Views: 8508 Larry Walther
Effective Interest Rate Method (Premium Amortization Schedule) How To Setup & Use
 
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How to setup and use a debt amortization schedule using the effective interest rate method (effective interest method), example is for amortizing debt for a bond issued at a premium (present value greater than face value of bond) using the effective interest rate method, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines the premium amount on the bond (amount the PV is greater than its FV), the premium amount has to be amortized over the life of the bond using an amortization schedule, detailed example showing how to setup amortization schedule and use the schedule to amortize the bond premium, schedule details cash interest payments (stated rate of interest x bond face value), interest expense (market rate x carrying value of bond outstanding debt), amortized interest expense (interest payment - interest expense),subtract amortized premium to the bonds carrying value to determine the bonds new carrying value (bond amortization), amortization schedule is used to determine the interest expense recognized on the income statement and amortization of bond premium on the balance sheet,detailed calculations for accounting by Allen Mursau
Views: 6170 Allen Mursau
Statement of Cash Flows:  How to Account for Equity Method Investments
 
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This video shows the effect of an Equity Method investment on the Statement of Cash Flows. When the investor recognizes a share of the investee's Net Income, the investor must subtract this amount as an adjustment in the cash flow from operating activities section. When the investor recognizes a share of the investee's Net Loss, the investor must add this amount as an adjustment in the cash flow from operating activities section. If the investor receives dividends from the investee, the dividends received are added as an adjustment in the cash flow from operating activities section. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like Edspira on Facebook, visit https://www.facebook.com/Edspira To sign up for the newsletter, visit http://Edspira.com/register-for-newsletter Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin To follow Michael on Facebook, visit https://www.facebook.com/Prof.Michael.McLaughlin
Views: 3037 Edspira
Accounting 2 - ACCT 122 - Program #214 - Issuing Bonds at a Discount
 
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Accounting 2 - ACCT 122 - Program #214 - Issuing Bonds at a Discount
Views: 14366 JCCCvideo