ACC 3228 Format and Steps in Preparing the CF Statement

CASH FLOW STATEMENT FORMAT

Statement of cash flow for the year ended 31

December xxx
Cash Flows from operating activities RM 000 RM 000
Operating profit before taxation and interest X
(net income + interest paid – interest received +
taxation)
Adjustment for:
Depreciation charges – non cash item X
Losses on sale of fixed assets -non cash item X
Increase (decrease) in provision for bad debts – non X/(x)
cash item
Profits on sale of fixed assets- non cash item (X)
Income tax paid (x)
Interest paid / received (x)/ X

Operating Cash flows before working capital changes XX

no cash, bank , bank overdraft
(Increases)/Decrease in inventory (X)/X
(Increases)/ Decreases in debtors/prepayments (X)/X
Increases /(Decreases) in creditors /accruals X/(X)
Cash generated from operations XX
Net cash inflow (or outflow) from operating activities X/X
Cash flows from Investing Activities
ACC 3228 Format and Steps in Preparing the CF Statement

Dividends received X
Purchase of non-current Assets (x)
Sale proceeds from Non-current assets X
Net cash inflows (outflows) from investing activities XX

Cash Flow from Financing Activities

Issue of ordinary share capital / Debenture X
Dividend paid (X)
Share premium X
Redemption of debenture loan / share capital (X)
Net cash inflow/(outflow) from financing activities XX
Net increase / (decrease) in cash and Cash equivalent XX
Cash and cash equivalent at beginning of year XX
(opening balance in SOFP) – cash + bank - bank
overdraft
Cash and cash equivalent at end of year (closing XX
balance in SOFP) – cash + bank - bank overdraft

Notes:

Operating activities Investing Activities Financing activities

Activities that enter into Activities that relate to Activities that relate to
the determination of net transactions involving transactions involving
income. Generally the acquiring or borrowing from creditors or
disposing of
speaking, this includes repaying creditors and
noncurrent assets.
These transactions engaging in transactions with
1. All transactions include. the company’s owners (as in
affecting current issue of shares).
assets. 1. Acquiring or selling
property, plant and
2. All transactions equipment.
affecting current
ACC 3228 Format and Steps in Preparing the CF Statement

liabilities (except for

issuing and repaying a 2. Acquiring or selling
note payable). securities (such as
bonds and stocks of
3. All non cash items other companies) held
such as Depreciation for long-term investment.
charges, gain or loss
on disposal

Steps in preparing the statement of cash flows

1. Analyse the income statement to check for non cash items such as
- depreciation expenses – REFER TO STEP 3
- interest paid or received,
- gain and loss on disposal – REFER TO STEP 3

(the above may need to be worked out before determining the net profit
before tax and interest)

2. Analyse the SOFP and Compute the change of current assets and current
liabilities from the prior year balance to the current (except for cash at bank
and bank overdraft).

The difference between the cash and cash equivalent is the answer for the
cash flow statement.
3. Check if there are any disposals of asset and purchase of new assets.

a) Cost price of asset of disposed asset

b) Accumulated depreciation of disposed asset
c) Gain or losses of disposal of asset
Book value < Proceeds = gain
Book Value > Proceeds = Loss
ACC 3228 Format and Steps in Preparing the CF Statement

4. May need to compute the amount paid for taxation, interest and
dividends. – check the SOFP for any opening and closing balance for any other
items e.g accrued expenses & income, prepaid expenses and income.

WORKINGS

Interest Expenses
Bank (paid) x Accrued b/d (BS) x
Accrued c/d (BS) x Income stmt (given) x
 

Interest received
Accrued b/d (BS) x Bank (paid) x
Income stmt (given) x Accrued c/d (BS) x

TAX Expenses
Bank –paid x Balance b/d x
balance c/d x Income statement x
 

Expenses - Accrued
Bank (paid) x Accrued b/d (BS) x
Accrued c/d (BS) x Income stmt x
 

Expenses - prepaid
Prepaid b/d (BS) x Bank (paid) x
Income stmt x Prepaid c/d (BS) x
 
ASSETS
Balance b/d x Disposed -cost x
New asset purch x Revalue (decrease)
REVALUE OF ASSET
(increase) X Balance c/d x
 
ACC 3228 Format and Steps in Preparing the CF Statement

DISPOSALS
Accumulated Depr
Disposed asset x Balance b/d x
Balance c/d x depr expenses x
 

OR THE ABOVE CAN BE MERGED

ASSETS (NET BOOK VALUE)

Balance b/d – asset NBV
New asset purch
Revalue (increase)
Profit on sale of
asset
x Disposal – book value x
x Dep expenses x
c Loss on sale of assets
Revalue (decrease)
x  Balance c/d x

Use this method if the question only provides Book value in the SOFP