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Statement of cash
flows
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Statement of cash
flows reports changes in cash flows from the following activities
1. Cash flows from operating activities
2. Cash flows from investing activities
3. Cash flows from financing activities
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Statement of cash
flows
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Structure of
statement of cash flows
Net cash provided
by (used for) operating activities
Net cash provided
by (used for) investing activities
Net cash provided
by (used for) financing activities
Net increase
(decrease) in cash
Cash, at the
beginning of period
Cash, at the end of
period
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Statement of cash
flows
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An example
Net cash provided
by (used for) operating activities
$200,000
Net cash provided
by (used for) investing activities
$(80,000)
Net cash provided
by (used for) financing activities
$150,000
Net increase
(decrease) in cash
$270,000
Cash, at the
beginning of period
$2,000,000
Cash, at the end of
period
$2,270,000
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Direct method,
indirect method
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Cash flows from
"operating" activities can be reported using one of the following
methods
1. Direct method
2. Indirect method
Cash flows from "investing" activities are always reported using direct
method
Cash flows from "financing" activities are always reported using direct
method
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Cash flows from
operating activities, direct method
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Direct method
Cash flows from operating activities
Cash receipts
received
from sales of goods
Cash payments
paid
for inventory purchases
paid to
employees
paid
for interest
paid
for taxes
paid
for other expenses
Net cash provided
by operating activities
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Cash flows from
operating activities, indirect method
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Indirect method
Cash flows from operating activities
Net income
+
noncash expenses
+
decreases in current assets
- increases in current assets
+
increases in current liabilities
- decreases in current liabilities
- gain on sale of property, plant and equipment
+ loss on sale of property, plant and equipment
Net cash provided
by operating activities
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