10.4　The Statement of Cash Flows

The Statement of Cash Flow is a financial statement that reports the cash receipts and cash payments of an entity during a particular period.The term“Cash”refers not only to the bills and coins we normally think of as cash，but to cash equivalents，too.Cash equivalents are highly liquid short-term investments that can easily and quickly be converted into cash，usually with a maturity of three months or less at the date of purchase.

The cash flows of an entity usually come from cash flows from operating activities，cash flows from investing activities，and cash flows from financing activities.Operating activities include the sale and the purchase or productions of goods and services，including collecting accounts payable from customers，paying suppliers or employees，and paying for items such as rent，taxes，and interest.Investing activities include acquiring and selling long-term assists and securities held for long-term investment purposes.Financing activities include obtaining resources from owners and creditors and repaying amounts borrowed.

The creation of the statement of cash flows is simple.First，list the activities those that increased cash(that is，cash inflows)and those that decreased cash(cash outflows).Second，place each cash inflow and outflow into one of three categories according to the type of an activity，which is introduced above that caused it.Table 10-6 shows the statement of cash flows of WR Company.

Table 10-6

Words＆Expressions

10.1

at the particular time在特定的时刻

the adjusted trial balance调整后的试算平衡表

the balance sheet资产负债表

the income statement利润表

the statement of cash flow现金流量表

statement of retained earnings留存收益表

accounts receivable应付账款

accumulated depreciation累计折旧

accounts payable应付账款

salaries payable应付职工薪酬

unearned consulting revenue预收咨询收入

common stock普通股股票

retained earnings留存收益

dividends股息，红利

consulting revenue咨询收入

rental revenue租金收入

depreciation expense—equipment折旧费用——设备

utilities expense公用设施开支

rental revenue租金收入

supplies expense易耗品费用

cash dividends现金股利

total liabilities负债总额

10.2

alternatively或者

format格式

income tax payable应付所得税

bonds payable应付债券

paid-in capital实收资本，资本金

retained income留存收益

the assets section资产部分

the liability section负债部分

the owner's equity section所有者权益部分

the sum of总数，总和

10.3

Profit and Loss Statement损益表

multiple-step多步式

gross profit毛利

intermediate中间的

subtotal小计，汇总

10.4

liquid流动的

be converted into把……变成

acquiring获得

repayment偿还

issuing debt securities发行债券

Notes

1.This order makes sense since the balance sheet uses information from the statement of retained earnings，which in turn uses information from the income statement.这个顺序是有道理的，因为资产负债表需要用到留存收益表中的信息，而留存收益表中的信息又需要用到利润表中的信息。该句为主从复合句。主句其实很简洁，即This order makes sense。由since引导的是原因状语从句，在这个原因状语从句中，又带有一个由which引导的非限制性定语从句。

2.The balance sheet is prepared at least yearly，but is also customary to be prepared monthly or quarterly.资产负债表至少每年编一次，也有的按习惯每月编制或按季度编制。该句为简单句。主语是the balance sheet，两个谓语部分由but连接。

3.The information is expressed in monetary terms and that the total of the assets is equal to the sum of the liabilities plus the owner's equity.资产负债表是以货币为计量单位的，同时资产总额等于负债与所有者权益之和。该句为主从复合句。主句是The information is expressed in monetary terms and that，that前面省略了in;其实，in that可以看作介词宾语从句，而that后面所接的部分就是介词宾语从句的内容。

4.The income statement is a financial statement that summarizes the results of a company's operation by matching revenue and related expenses for a particular accounting period.利润表是汇总通过配比一定会计期间的收入与费用来反映企业在该时期的经营成果的财务报表。该句为主从复合句。主句中的表语a financial statement后有一个由that引导的定语从句，修饰先行词a financial statement。

5.The Single-step Statement is another format of income statement which groups all revenues together and then lists and reduces all expenses together without drawing any intermediate subtotals.单步式利润表是利润表的另一种形式，它是把所有的收入项列示在一起，然后一次性地扣减所有的费用项，没有中间汇总额。该句为主从复合句。主句中的表语another format of income statement后有一个由which引导的定语从句，该定语从句有三个动词作谓语，即groups，lists和reduces。

6.The term“Cash”refers not only to the bills and coins we normally think of as cash，but to cash equivalents，too.这里的“现金”不仅是我们通常意义上所说的纸币和硬币，还包括现金等价物。该句为主从复合句。主句中的宾语the bills and coins后有一个省略了关系代词that或which的定语从句。

7.Cash equivalents are highly liquid short-term investments that can easily and quickly be converted into cash，usually with a maturity of three months or less at the date of purchase.现金等价物是指具有极强流动性的短期投资，这些投资可以非常容易和迅速地转化为现金，通常是指到期在3个月或3个月以内的投资。该句为主从复合句，主句中的表语highly liquid short-term investments后有一个由that引导的定语从句，该从句还带有一个由介词with引导的介词短语作状语。

8.Operating activities include the sale and the purchase or productions of goods and services，including collecting accounts payable from customers，paying suppliers or employees，and paying for items such as rent，taxes，and interest.经营活动包括商品和服务的销售、购买或生产，这些活动涉及客户应对账款的回笼、对供应商或工人的支付及对诸如租赁费、税金和利息之类项目的支付。该句为简单句。在主语的主—谓—宾之后，带有三个现在分词短语作状语，即:①including collecting②paying suppliers③and paying for

9.Second，place each cash inflow and outflow into one of three categories according to the type of an activity，which is introduced above that caused it.其次，根据对上述活动的划分标准，将每一笔现金流入和流出分别填入相应的类别中。该句为主从复合句。主句为祈使句，即placeinto关系代词which引导的是非限制性定语从句，而该非限制性定语从句中，又带有一个that引导的限制性定语从句。

Exercises

Section 1:Know the Concepts

1.Answer each of the following questions.

(1)What is the name of the accounting report that may show either a net profit or a net loss for an accounting period?

(2)What are the two main parts of the body of the income statement?

(3)If total revenue exceeds total expenses for an accounting period，what is the difference called?

(4)Of the two forms of the balance sheet，which form more closely approximates the accounting equation?

2.Translate the following terms into Chinese.

(1)particular

(2)multiple-step

(3)liquid

(4)maturity

(5)interest

(6)creditor

(7)financial position

(8)operating results

(9)the balance sheet

(10)the income statement

(11)the statement of cash flows

(12)net income

(13)net loss

(14)multiple-step income statement

(15)single-step income statement

(16)the cost of goods sold

(17)gross profit

(18)income tax expenses

(19)cash receipts

(20)cash payments

(21)cash equivalents

(22)operating activities

(23)financing activities

Section 2:Practical Application

1.Prepare the financial statements of Cruz Auto Detail from the practical application 3-6 of Chapter 3:

(1)The income statement for the Month Ended June 30，20

(2)The statement of owner's equity for the Month Ended June 30，20

(3)The balance sheet as of June 30，20

2.The accounts and their balances，as of December 1 of this year，for Stanfill Services are listed below:

Dec.1 Stanfill deposited$10，000 in an account in the name of the business.

　　　4 Received and paid the bill for the rent for Dec.$900.

11 Received$1，860 on account from customers.

19 Sold service on account to M.Linares，$2，150.

22 Received and paid the bill for utilities，$197.

23 Bought supplies on account from Staple Works，$248.

31 Paid the wages for the month，$1，665.

31 Stanfill withdrew$1，800 for personal use.

Instructions

(1)Prepare a trial balance as of December 31.

(2)Prepare an income statement for the year ended December 31.

(3)Prepare a statement of owner's equity for the year ended December 31.

(4)Prepare a balance sheet as of December 31.

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