STATEMENT OF CASH FLOW
Activities Related to Cash Flow
1. Operating Activities
Activities of an entity related to their main revenue generating activities of providing goods or
services.
Cash Inflows
 Cash received from sales and service revenue
 Collection of accounts receivable
 Refunds from supplier
Cash Outflows
 Payment to suppliers
 Payment of operating expenses like salaries, rent, utilities, and taxes
 Payment for interest expense (of debt)
 Charity contributions
 Cash refund to customers
2. Investing Activities
Activities of an entity related to sale and purchase of long-term assets and other investments.
Cash Inflows
 Cash proceeds from selling productive assets like property, plant, and
equipment
 Cash proceeds from selling investments in equity securities of other companies
Cash Outflows
 Payments for the purchase of productive assets like PPE
 Payments to acquire investments in equity securities
3. Financing Activities
Activities of an entity related to acquisition of funding for the use of the entity.
Cash Inflows
 Cash investments by the owner
 Cash proceeds from issuance of share capital
 Cash proceeds from long-term borrowing
Cash Outflows
 Cash withdrawal by the owner
 Payments of cash dividends to shareholders
 Payments of long-term borrowing (principal amount)
Direct Method