example

• 1. Issues $20,000 shares of common stock for cash.

• 2. Purchases equipment on account for $3,500, payment due within
the month.
• 3. Receives $4,000 cash in advance from a customer for services not
yet rendered.
• 4. Provides $5,500 in services to a customer who asks to be billed for
the services.
• 5. Pays a $300 utility bill with cash.
• 6. Distributed $100 cash in dividends to stockholders.
 Asset Liabilities + equity
account unearned account
cash equipment recievable revnue payable dividend common stock

1 20000 20000
20000 20000
2 3500 3500
20000 3500 3500 20000
320000+4000 4000
24000 3500 4000
4 5500 20000+5500
24000 3500 5500 4000 3500 25500

524000-300 25500-300
23700 3500 5500 4000 3500 25200
6 23700-100 100
23600 3500 5500 4000 3500 100 25200

32600 32800
 Statement of Cash Flow
• The statement of cash flows presents the change in cash for a period of time in terms
of the company’s operating, investing, and financing activities.
• The entire Cash column of the analysis in Exhibit 2–11 can use to create a statement
of cash flows for Overnight Auto Service.
• The statement classifies the cash flows into three categories—
• operating,
• investing, and
• financing—and relates these categories to
• Cash flows from operating activities are the cash effects of revenue and expense
transactions.
• Cash flows from investing activities are the cash effects of purchasing and selling
assets.
• Cash flows from financing activities are the cash effects of the owners investing in
the company and creditors loaning money to the company and the repayment of either
or both.
• Format of the Statement of Cash Flows
• Operating activities
• Investing Activities
• Financing Activities