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Statement of Cash Flows

The statement of cash flows summarizes a company's operating, investing, and financing cash flows during a period. The operating section includes cash from sales and payments for expenses. The investing section involves buying/selling long-term assets and securities. The financing section includes cash from issuing/repaying debt and getting capital contributions/withdrawals from owners. Examples are provided for each section's typical cash flow activities.

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96 views2 pages

Statement of Cash Flows

The statement of cash flows summarizes a company's operating, investing, and financing cash flows during a period. The operating section includes cash from sales and payments for expenses. The investing section involves buying/selling long-term assets and securities. The financing section includes cash from issuing/repaying debt and getting capital contributions/withdrawals from owners. Examples are provided for each section's typical cash flow activities.

Uploaded by

junjun
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCTBA1: STATEMENT OF CASH FLOWS

o Investing activities
 A statement of cash flow is a basic component  are the cash flows derived from
of the financial statements summarizing the the acquisition and disposal of
operating, investing and financing activities of long-term assets and other
an enterprise. investments not included in cash
 In simple language, the statement of cash flow equivalent.
provides information about the cash receipts  include cash flows from
and cash payments of an enterprise during a transactions involving non-
period. operating assets.
Examples of Cash Flows from Investing Activities are:
CLASSIFICATION OF CASH FLOWS  Cash payments to acquire property, plant and
equipment, intangibles and other long-term
 Cash flows are inflows of cash and cash
assets.
equivalents. The statement of cash flow should  Cash receipts from sales of property, plant and
report cash flows during the period classified as equipment, intangibles and other long-term
follows: assets.
 Cash payments to acquire equity or debt
instruments of other enterprises.
o Operating activities  Cash receipts from sales of equity or debt
 are the cash derived primarily instruments.
from the principal revenue
producing activities of the
enterprise.
 generally result from transactions
and other events that enter into
the determination of net income
or loss.
Examples of Cash flows from Operating Activities are:
 Cash receipts from sale of goods and
rendering of services
 Cash receipts from royalties, rental,
fees, commissions and other revenue,
 Cash payments to suppliers for goods
and services
 Cash payments for selling, o Financing activities
administrative and other expenses  are the cash flows derived from
 Cash receipts and payments for the equity capital (investment of
securities held for dealing or trading owner) and borrowings of the
purposes (Investment in Trading business.
Securities)  are the cash flows that result
from transactions between the
enterprise and its owners (equity
financing) and between the
enterprise and its creditors (debt
financing).
 include the cash flows from
transactions involving “nontrade
liabilities” and “equity” of an
enterprise.
Examples of Cash Flows from Financing Activities
 Cash receipts from contributions by owners.
 Cash withdrawals by owners.
 Cash receipts from issuing notes, bonds,
mortgages and other short or long term
borrowings
 Cash payments for amounts borrowed.
Note: interest payments are included in
the operating activities

Statement of Cash Flows Format

Exercise
Transactions O, I, F or NA
1. Payment of taxes
2. Cash Proceeds from borrowings
3. Cash paid upon purchase of equipment
4. Cash received upon sale of long term investment
5. Additional cash investment of the owner
6. Owner's withdrawal of supplies for personal use
7. Payment of salaries
8. Cash deposit from customers for services to be
completed/delivered
9. Collection from customers
10. Payment of liabilities
11. Repayment of matured loan to the bank
Principal(F); interest (O)
12. Payment to suppliers for services rendered
13. Cash received from sale of equipment
14. Additional Investment of the owner in the
form of equipment

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