The Statement of Cash Flows

This statement shows the
cash receipts and cash
payments of the entity
during the period. It shows
where cash came and from
and how it is spent.
A.DIRECT METHOD
B.INDIRECT METHODS
Shows each major class of cash
receipts and cash payments. It
also provides information
which may be useful in
estimating future cash flows.
Net income is adjusted for the
effects of non cash transactions,
change in balances of asset
accounts and items associated
with investing and financing
cash flows.
A.OPERATING
B.INVESTING
C.FINANCING

Are primarily derived from the
principal revenue-producing
activities of the enterprise. They
generally result from the
transactions and other events
that enter into determination of
profit or loss.
Cash receipts from sale of goods
and rendering of services.
Cash receipts from royalties, fees,
commissions and other revenue
Cash payments to supplier of goods
and services
Cash payments to and on behalf of
the employees
Cash receipts and payments of an
insurance enterprise for premiums and
claims, annuities and other policy
benefits
Cash payments or refunds of income
taxes unless they specially indentifies
with financing and investing activities
Cash receipts and payments from
contracts held for dealing or trading
purpose.
Represent the extent to which
expenditures have been made
for resources intended to
generate future income and cash
flows. These affect non trade
assets, most of which are
classified as noncurrent.
Cash payments to acquire
property, plant and equipment,
intangibles and other long-term
assets.
Cash receipts from sale of
property, plant and equipment,
intangibles and other long-term
assets.


Cash advances and loans made to
other parties (other than financial
institution)
Cash receipts from repayment of
advances and loans made to other
parties.
Information arising from
financing activities is useful in
predicting claims on future cash
flows by providers of capital to
the enterprise. These are
transaction with non trade
creditors and shareholders.
Cash receipts from loans
made to a financial institution
Cash repayments of amount
borrowed
Cash received from customers 120,000
Cash paid to suppliers 75,000
Interest received 12,000
Interest paid on bank loans 14,500
Refund for income tax 35,000
Cash paid for rent 35,000
Cash paid for utilities 7,650
Dividends paid 8,700
Payment for 1st installment for bank loan 10,000
Withdrawal of owner 12,540
Proceeds for sale of equipment 6,530
Payment for furnitures purchased 12,550
Payment for equipment purchased 35,460
Additional investment of owner 88,800
Proceeds from bank loan 10,000
WORKBOOK EXERCISES…