STATEMENT OF CASH FLOWS
• Provides information about the cash receipts and disbursements of an entity during a period.
• “Cash” in cash flows includes the cash equivalents.
Format:
Cash flows from
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash and cash equivalents
Cash and Cash equivalents, beginning
Cash and Cash equivalents, ending
XX
XX
XX
XX
XX
XX
Cash flows from Operating activities
- derived from the principal revenue-producing activities
- Cash collected from customers
- Cash paid to suppliers
- Cash paid for prepaid expenses
- Cash receipts from sale of goods and rendering of services
- Cash payments for operating expenses (salaries, utilities, etc)
- Income taxes paid/received, interest paid/received
Cash flows from Investing activities
- Derived from the acquisition and disposal of non-current or long-term assets
- Cash payments to acquire PPE, intangibles, or other long-term assets
- Cash receipts from sale of PPE, intangibles, or other long-term assets
- Cash advances or loans / payments MADE TO OTHER PARTIES.
Cash flows from Financing activities
- cash flow transactions with non-trade creditors and shareholders (owners).
- Cash receipts from loans, notes, bonds, and other short or long-term borrowings
- Cash repayments of amounts borrowed
REPORTING CASH FLOWS (OPERATING)
Indirect Method:
Net Income
Depreciation
Doubtful
Amortization
Increase in Current Assets
Decrease in Current Assets
Increase in Current Liabilities
Decrease in Current Liabilities
Gain on sale of assets
Loss on sale of assets
Cash flows from operations
XX
XX
XX
XX
(XX)
XX
XX
(XX)
(XX)
XX
XX
Direct method:
Cash collected from customers
Cash paid to suppliers
Cash paid for prepaid expenses
Cash paid for operating expenses
Interest paid
Income taxes paid
Cash flows from operations
*operating expenses such as salaries, utilities, etc
*prepaid expenses like insurances, rent, etc.
*Depreciation, doubtful, and amortization are non-cash expenses
XX
(XX)
(XX)
(XX)
(XX)
(XX)
XX