FABM | W#5

STATEMENT OF CASH FLOW

CASH FLOW STATEMENT

PROVIDES AN ANALYSIS OF INFLOWS AND/OR OUTLFLOWS OF CASH FROM/TO OPERATING, INVESTING, AND FINANCING ACTIVITIES (DELOITTE GLOBAL SERVICES LIMITED, 2015).

CASH FLOW STATEMENT

THIS STATEMENT SHOWS CASH TRANSACTIONS ONLY COMPARED TO THE SCI WHICH FOLLOWS THE ACCRUAL PRINCIPLE

CASH FLOW STATEMENT

PROVIDES THE NET CHANGE IN THE CASH BALANCE OF A COMPANY FOR A SECOND

CASH FLOW STATEMENT

THIS HELPS OWNERS SEE IF THEIR REVENES ARE ACTUALLY TRANSLAED TO CASH COLLECTIONS OR IF THEY HAVE ENOUGH CASH INFLOWS IN ORDER TO PAY ANY MATURING LIABILITIES

OPERATING ACTIVITIES

ACTIVITIES OF AN ENTITY RELATED TO THEIR MAIN REVENUE GENERATING ACTIVITIES OF PROVIDING GOODS AND SERVICES

OPERATING ACTIVITIES

EX.)

1. INCOME STATEMENT

2. BALANCE SHEET

3. CURRENT ASSETS

4. CURRENT LIABILITIES

INVESTING ACTIVITIES

ACTIVITIES OF AN ENTITY RELATED TO SALE AND PURCHASE OF LONG-TERM ASSETS AND OTHER INVESTMENTS

INVESTING ACTIVITIES

EX.)

1. BALANCE SHEET’S NON-CURRENT ASSETS

FINANCING ACTIVITIES

ACTIVITIES RELATED TO ACQUISITION OF FUNDING FOR THE USE OF THE ENTITY

FINANCING ACTIVITIES

EX.)

1. BALANCE SHEET’S NON-CURRENT LIABILITIES

2. AND OWNER’S EQUITY

CASH INFLOWS

OPERATING ACTIVITIES//NET INCOME ACTIVITIES

1. CASH RECEIVED FROM SALES AND SERVICE REVENUE

2. COLLECTION OF ACCOUNTS RECEIVABLE

3. REFUNDS FROM SUPPLIERS

CASH OUTFLOWS

OPERATING ACTIVITIES//NET INCOME ACTIVITIES

1. PAYMENTS TO SUPPLIERS

2. PAYMENT OF OPERATING EXPENSES LIKE SALARIES, RENT, UTILITIES, AND TAXES

3. PAYMENT OF INTEREST EXPENSE

4. CHARITY CONTRIBUTIONS

5. CASH REFUND TO CUSTOMERS

CASH INFLOWS

INVESTING ACTIVITIES//NON-CURRENT ASSETS ACTIVITIES

1. CASH PROCEEDS FROM SELLING PRODUCTIVE ASSETS LIKE PROPERTY, PLANT, AND EQUIPMENT

2. CASH PROCEEDS FROM SELLING INVESTMENTS IN EQUITY SECURITIES OF OTHER COMPANIES

CASH OUTFLOWS

INVESTING ACTIVITIES//NON-CURRENT ASSETS ACTIVITIES

1. PAYMENTS FOR THE PURCHASE OF PRODUCTIVE ASSETS LIKE PROPERTY, PLANT, AND EQUIPMENT

2. PAYMENTS TO ACQUIRE INVESTMENTS IN EQUITY SECURITIES

CASH INFLOWS

FINANCING ACTIVITIES//NON-CURRENT LIABILITIES AND OWNER’S EQUITY ACTIVITIES

1. CASH INVESTMENT BY THE OWNER

2. CASH PROCEEDS FROM ISSUANCE OF SHARE CAPITAL

3. CASH PROCEEDS FROM LONG-TERM BORROWING

CASH OUTFLOWS

FINANCING ACTIVITIES//NON-CURRENT LIABILITIES AND OWNER’S EQUITY ACTIVITIES

1. CASH WITHDRAWAL BY THE OWNER

2. PAYMENTS OF CASH DIVIDENTS TO SHAREHOLDERS

3. PAYMENTS OF LONG-TERM BORROWING

DIRECT METHOD

THE OPERATING CASH FLOW SECTION OF THE CFS UNDER THE DIRECT METHOD WOULD SHOW EACH MAJOR CLASS OF GROSS CASH RECEIPTS AND GROSS CASH PAYMENTS (DELOITTE, GLOBAL SERVICES, LIMITED, 2015)

USER-FRIENDY

DIRECT METHOD

USER-FRIENDY

INDIRECT METHOD

THE PRESENTATION OF CASH FLOWS FROM OPERATING ACTIVITIES STARTS WITH NET INCOME, ADJUSTED WITH NON-CASH EXPENSES AND CHANGES IN WORKING CAPITAL

INDIRECT METHOD

THE PRESENTATION OF CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES WORKS THE SAME WAY AS THAT OF THE DIRECT METHOD

INDIRECT METHOD

ACCOUNTANT-FRIENDLY