What story does this tell?

Operating *Positive **Negative Negative

*Positive cash
flow results in **Negative cashflow results in
Day to Day Business ability to finance the need to use outside
Activities own activities. sources to finance activities.

Examples: SOLVENCY
Earning Revenue
Incurring Expenses
Buying current assets
Paying for current liabilities

Investing Negative Negative Positive

Investing in its future GROWTH

Examples:
Buy longterm assets
Sell long term assets

Financing Positive Positive Negative

Obtain Capital ($)

Examples:
Long-term Liabilities (debt)
Stockholders' Equity
 Company Name
Statement of Cash Flows
For the Period Ended December 31, 20XX
OPERATING:
Cash Flows from Operating Activities:
Net Income
Current Assets and Liabilities
Liab increase + / Liab decrease -
Asset increase - / Asset decrease +
Losses and Gains from Sale of Fixed Assets
Amortization
Depreciation
Net Cash Flow from Operating Activities $XXX
INVESTING:
Cash Flows from Investing Activities:
Buying and Selling of Fixed Assets
Purchasing and Selling of Other Companies' Stocks and Bonds
Net Cash Flows Provided by (cash inflow>cash outflow) / (Used for) (cash inflow<cash outflow) Investing
Activities (XXX)
FINANCING
Cash Flows from Financing Activities:
Issuance of Stock (equity securities)
Issuance of Bonds (debt securities)
Repurchase own stock
Borrowing and Paying Loans
Paying Cash Dividends
Net Cash Flows Provided by (cash inflow>cash outflow) / (Used for) (cash inflow<cash outflow) Financing XX
Activities

Net Increase/(Decrease) in Cash for the Period XXX

Cash at the beginning of the period (agree to beg. bal. on B/S) X
Cash at the End of the period (agree to end. bal. on B/S) $XXX

Note: Noncash investing and financing activities should be excluded from the Statement itself. These transactions involve no cash
inflows or outflows, but they have a significant affect on the prospective cash flows of a company.

These noncash activities are disclosed in a separate schedule accompanying the Statement. These noncash activities include:
►Acquiring an asset through a capital lease
►Conversion of debt to equity
►Exchange of noncash assets and liabilities for other noncash assets and liabilities
►Issuance of stock to acquire assets

Note: Interest expense is a routine payment

considered operating, NOT financing on
statement of cash flows. When using direct method
 OPERATING:
Indirect Method:
Net Income (accrual basis)
Current Liabilities and Assets
L increase + / decrease -
A increase - / decrease +
Loss on Sale + / Gain on Sale-
Amortization +
Depreciation +
Net Cash Flow from Operating
Activites
1. Indirect Method

Zuckerman Farms
Statement of Cash Flows
For the Year Ended December 31, 2017

Net Cash Flows from Operating Activities

Adjustments to Reconcile Net Income to Net Cash

Provided by Operating Activities:

Net Income $145,000

Add: Depreciation Expense $12,800
Depreciation Expense - Equipment 20,000
Increase in Income Tax Payable 3,100
Decrease in Accounts Receivables 7,700 43,600

Less: Gain on Sale of Land 30,000

Decrease in Accounts Payable 3,200
Increase in Merchandise Inventory 27,200
Increase in Prepaid Expenses 1,160
Decrease in Accrued Salaries Exp 1,600 (63,160)
Net Cash Provided (Used) by Operating Activities $125,440
Cash flow from Investing Activities
Add: Cash from the Sale of Land 70,000
Less: Cash Paid for Building (100,000)
Net Cash Provided (Used) by Investing Activities (30,000)
Cash Flows from Financing Activities:
Add: Proceeds - Issuance of Common Stock 150,000
Proceeds - Issuance of Mortgage Note 50,000 200,000
Less: Payment of Notes Payable (165,000)
Net Cash Flows Provided by Financing Activities 35,000
Net Increase in Cash for the Year $130,440
Cash at the Beginning of the Year 86,900
Cash at the End of the Year $217,340

Schedule of Noncash Investing and Financing Activities

Issuance of 500 shares of Common Stock $30 Par for $15,000 worth of machinery and equipment
 Cash Flow Statement Income Statement Change on B/S Balance Sheet
Beginning +Add -Subtact Ending
Current Liab (L) and Assets (A)
+Cash Receipts
Collections from Customers = +Sales (Revenue)
Liab increase + / Accounts Receivable
-Cash fr Cr. Sales
(Collections from
-A/R Increase +Beg. +Cr. Sales customers) =End
-Cash Payments
Cash Payment to Suppliers= +COGS Inventory
+Inventory -Inventory Sold
+Inventory Increase +Beg. Purchases (COGS) =End
-Inventory Decrease
+Sell Long-term Assets +A/P Decrease A/P
+Purchases on -Payments on
-Buy Long-term Assets -A/P Increase +Beg. Account (Cr.) Account =End
-Purchase other company's stock

Cash Payments for Insurance= +Insurance Exp. Prepaid Insurance

+Prepaid Insurance +Payment for
increase +Beg. Insurance -Insurance Incurred =End
-Prepaid Insurance
+Sell own stock Decrease
+Take on new debt ( loan --
Notes Payable or Bond)
-Repurchase own stock (treasury
stock) +Salaries Exp.
+Salaries Payable
decrease Salaries Payable
-Salaries Payable
increase +Beg. +Salaries Accrued -Salaries Paid =End
2. Direct Method

Zuckerman Farms
Statement of Cash Flows
For the Year Ended December 31, 2007

Net Cash Flows from Operating Activities

Cash Receipt:
Collections from Customers $ 241,500
Total Cash Receipts $ 241,500
Cash Payments:
Payments to Suppliers (100,400)
Payments for Salaries (7,600)
Payment for Other Operating Expenses (hint:
include prepaids and taxes) (8,060)
Total Cash Payments (116,060)

Net Cash Provided (Used) by Operating Activities $ 125,440

NOTE: INVESTING AND FINANCING SECTION SAMES AS INDIRECT METHOD.