Cash flow statements

Get Ready!
0 Before you read the passage, talk about
these questions.
1 What is a cash flow statement?
2 What are some of the things that go on a cash
flow statement?

c.) Cash flow from O~erations Sometimes, an income When a sale is made, it
c Cash generated from sales 100,000 statement shows huge net often takes months for
;:: Pa:iments to sueeliers and emelo:iees (70,000)
en income. But the cash flow payment to arrive. A
en ~
G.) Pa:iments on debts (15,000)
Pa:iments on taxes (5,000) statement shows negative company may have
-~

--
'i: ("')
Net cash flow from operating activities 10,000 cash flow. How can this be? generated $500,000 in
CL a; Cash flow from Investing sales, but only received
Cash flow statements
~
G.)
Pa:iments for new investments (9,000)
c show the inflow and $100,000 in payment. The
Dividends received 2,000
w
c
~ Net cash flow from investing (7,000) outflow of cash. This income statement count~
0;::
t:rl Cash flow from Financing
.!:; includes: $500,000 in revenue. But
c_c::: Debt
-o~ increases 4,000 the cash flow statement
mu.. Cb Dividends eaid to stockholders (8,000) • revenues and expenses records only cumulative
CQ ~ Net cash flow from Financing Activities (4,000) • cash distributions to
..c ~ Net cash flow cash - the $100,000 in
:c: ._
~
a:u .s Cash balance, beginning of }'ear
(1,000)
4,000
owners
• dividends paid to
proceeds.
Cash balance, end of }'ear 3,000
stockholders
• financing activities

Reading
f) Read the cash flow statement and journal article. ......_.__ _ _ _!!9!11!!!--;;~:::~::
Then, mark the following statements as true (T) or
false (F). 0 Fill in the blanks with the
correct words and phrases
1 _ Cash flow statements only record cash.
from the word bank.
2 _ Dividends are not included in cash flow statements.
3 _ Income statements reflect current status better than
cash flow statements. inflow stockholder
cash distributions
Vocabulary outflow dividends
8 Match the words (1-5) with the definitions (A-E).
1 The company makes to
1 _cash flow 4 _ financing activities the owners every month.
2 _generate 5 _cumulative 2 Every owns a tiny
3 _proceeds portion of the company.
3 Any time money is spent, it is
A receiving money from investors or creditors recorded as a(n) _ __
B created by incremental additions 4 The company pays quarterly
C the process of money moving into and out of a company ___ to the stockholders.
D to make or create 5 Money received for sales is a(n)
E money earned from a sale ___ of cash.
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0 " Listen and read the statement and Speaking
article again. Why might a cash flow
statement and an income statement have
0 With a partner, act out the roles below
based on Task 7. Then switch roles.
a big balance difference?
USE LANGUAGE SUCH AS:
Listening Could I talk to you for a second?
The cash flow statement only shows ...
0 " Listen to a conversation between a
The cash flow statement only counts ...
manager and an accountant. Choose the
correct answers.
1 What is the dialogue mostly about?
Student A: You are a manager. Talk to Student
A money generated from sales B about:
B accounts receivable payments • a cash flow statement
C errors on an income statement • low/high figures
D contents of cash flow statements • what the figures mean

2 The cash flow statement only counts

Student B: You are an accountant. Answer
A net income C cumulative cash
Student A's questions.
B sales amounts D accounts receivable

0 " Listen again and complete the Writing

conversation.
0 Use the conversation from Task 8 to
Manager: Hi, David. Could I talk to you for a complete the email. Make up names for
second? the CPA and Manager.
Accountant: Sure. 1 _ _ _ _?
Manager: Well, our income statement shows a
net income of $200,000.
CPA -
Accountant: That 2 _ _ about right. FROM: - -- - - -
Manager: But the cash flow statement shows TO: _ _ _ --~ Manager - - -
only $100,000 3 _ _ from sales. ·1 about the different
Accountant: Oh, well, the cash flow statement I received your .ema1 e statement and the
only counts cumulative cash - the numbers on the incom L t me explain why
4 _ _ cash we spend and receive. cash flow statement. e
they are different.
Manager: So ... Are you 5 _ _ me that we
haven't received some of the
payments on our accounts receivable?
Accountant: Exactly. But our accounts receivable
should 6 _ _ _ _ for it by next
month.

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