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The major activities of cashflow

* The cash flow statement will reflect the
cash flow effects of each of the major activities of the enterprise when the cash flows are classified according to whether they stem from
*

Operating Activities

* Investment Activities * Financial Activities

Net Change in Cash and Cash Equivalents

MEANING OF CASH FLOW STATEMENT
The Cash Flow Statement means the statement of changes in Cash and Cash equivalents.
It shows the following for the period covered by it:

Net Cash flows from Investing Activities

Net Cash flows from Financing 4 Activities

Net Cash flows from Operating Activities

Cash Flows from Operating Activities

Cash Inflows

Cash Outflows

‡Cash Sales ‡Cash Receipts
from Debtors ‡Trading Commission Received ‡B/R collected

‡ Cash Purchases ‡ Cash Paid to

Suppliers ‡ Wages Paid ‡ Mfg. Oh.Paid ‡ Admin.& Selling Expenses
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Cash Inflows
Sale of«««.. ‡ Machinery ‡ Land & Building ‡ Furniture & Fixtures ‡ Investments ‡ Non Operating Incomes

Cash Outflows Purchase of««. ‡ Machinery ‡ Land & Building ‡ Furniture & Fixtures ‡ Investments

* Investing activities are the acquisition and

disposal of long-term Assets and other Investments not
included in Cash equivalents.

Cash Inflows
Issue of ‡ Equity Share Capital ‡ Pref. Share Capital ‡ Debentures ‡ Raising of other borrowings.

Cash Outflows Purchase of««.

‡ Buy back of Equity Shares ‡ Redemption of Preference
Shares ‡ Repayment of Long-term borrowings Dividend paid ‡ Interest paid

* These are the activities that result in changes in the size
and composition of the owners capital and borrowings of the enterprise.

Two Formats for Reporting Operating Activities
Direct Method Reports the cash effects of each operating activity Indirect Method Starts with accrual net income and converts to cash basis

*

A. Operating Receipts in Cash: Cash Sales Cash receipts from customers Trading Commission received B. Operating Payments in Cash: Cash Purchases Cash paid to suppliers Trading Commission paid Manufacturing Exp. paid Admin & Selling Exp. paid C. Cash generated from Operations before taxes [A ² B] D. E. F. G. Income Tax paid (Net of refund) Cash flow before extraordinary items Insurance proceeds from earthquake disaster settlement Net Cash from Operating Activities

* Cash Flow from Operating Activities
(Direct Method )

Balance Sheet of United Brands Corporation
2009 2008

Assets
Cash Accounts Receivable Short term investments Inventory Prepaid Expenses Land Building & Equipment Less : Accumated Depreciation 20 30 50 6 60 75 -20 221 29 32 12 46 3 80 81 -16 267

Liabilities
Share holders Accounts payable Salaries Payable Income Tax Payable 145 20 48 8 221 178 26 57 6 267

Income Statement
Revenues
Sales Revenue Investment Revenue Gain on Sales 2009 103 3 8

Expenses
Cost of Goods sold Salaries Expenses Depreciation Expenses Bond interest Expense Insurance Expense Loss on sale of equipment Income tax expense -60 -13 -3 -5 -7 -2 -9 15

Net income

Balance Sheet of United Brands Corporation
2009 2008

Income Statement
Revenues
29 32 12 46 3 80 81 -16 267

Assets
Cash Accounts Receivable Short term investments Inventory Prepaid Expenses Land Building & Equipment Less : Accumated Depreciation 20 30 50 6 60 75 -20 221

Sales Revenue Investment Revenue Gain on Sales

2009 103 3 8

Expenses
Cost of Goods sold Salaries Expenses Depreciation Expenses Bond interest Expense Insurance Expense Loss on sale of equipment Income tax expense -60 -13 -3 -5 -7 -2 -9 15

Liabilities
Share holders Accounts payable Salaries Payable Income Tax Payable 145 20 48 8 221 178 26 57 6 267

Net income

*
Inflows Out flows

Cash Flow Statement from April 1st 2008 - March 31st 2009
Operating Activities Cash Inflows From the Customers ( 30-32)+103 Cash Outflows To Supplier of the Goods To Employees To Insurance Expense For Income Tax Net Cash Flows of Operating Activities 101

-50 -11 -4 -11 22

*Cash Flows From Investing Activities:
(+) Proceeds From Sale Of Assets (-) Purchases Of Property And Equipment

(=) Total Net Cash Provided (used) By Investing Activities

Investing Activities Cash flows Sale Of Land Sale Of Equipment Cash outflows Purchase of Short Term Investment Purchase of Land Net Cash Flows of Investing Activities

30 12 18 5 19

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Cash Flow Statement from April 1st 2008 - March 31st 2009
Operating Activities Cash Flows From the Customers ( 30-32)+103 Cash Outflows To Supplier of the Goods To Employees To Bond Holders To Insurance Expense For Income Tax Net Cash Flows of Operating Activities Investing Activities Cash flows Sale Of Land Sale Of Equipment Cash outflows Purchase of Short Term Investment Purchase of Land Net Cash Flows of Investing Activities Financing Activities Cash flows Retriement of bonds Payable Cash outflows Sale of common stock Payment of Cash Dividend Net Cash Flows from Financing Activities Net increase in Cash Cash Balance on April 1st 2008 Cash Balance on 31st March 2009 26 15 5 6 9 20 29 101

50 11 3 4 11 22

30 12 18 5 -19

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Balance Sheet as on 31st December
Assets Cash Short - term investments Debtors Provision for Doubtful debts Inventory Prepaid Expenses Land Machinery Provision for depreciation Liabilities Creditors Bills Payable Securities premium 15% Debentures Equity Share Capital Profit & Loss Appropriation Account 66,000.00 2,000.00 10,000.00 75,000.00 26,000.00 168,000.00 347,000.00 78,000.00 42,000.00 30,000.00 156,000.00 306,000.00 2010 9,000.00 10,000.00 95,000.00 3,000.00 103,000.00 6,000.00 69,000.00 172,000.00 113,000.00 580,000.00 2009 12,000.00 1,000.00 79,000.00 2,000.00 92,000.00 5,000.00 66,000.00 156,000.00 102,000.00 515,000.00

Income Statement for the year ended 31st December 2009 rs Net sales Revenue Cost of good sold Gross Margin Operating Expenses Operating Income Interest Expenses Income before Tax Law Suit Compensation Income Tax Net Income 600,000.00 (500,000.00) 100,000.00 (66,000.00) 34,000.00 4,000.00 30,000.00 5,000.00 35,000.00 (17,000.00) 18,000.00

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Cash Flow Statement of ABC Ltd for the Year ended 31st Dec 2009 Rs. Cash Flow From Operating Activities Net profit as per P&L A/c Adjustments for : Provision for depreciation Provision for doubtful debts Interest paid on debentures Operating profit before working capital changes ADD : Increase in Bills payable LESS : Increase in debtors Increase in Inventory Increase in Prepaid Expenses Decrease in Creditors Cash generated from operating activities NET CASH FLOW USED IN OPERATING ACTIVITIES(A) Cash Flows from Investing Activities Purchase of Land Purchase of Machinery NET CASH FLOW USED IN INVESTING ACTIVITIES(B) Cash flows from financing activities Securities premium Issue of 15% debentures Redemption of equity share capital Interest paid(15% *42000) NET CASH FLOWS FROM FINANCING ACTIVITIES(C) Net decrease or decrease in cash and cash equivalents(A+B+C) Cash and cash equivalents at the beginning of the year(12000+1000) Cash and cash equivalents at the end of the year(9000+10000) 12000 Rs.

11000 1000 6300 30300 2000 -16000 -11000 -1000 -12000 -38000 -7700

-3000 -16000 -19000

10000 33000 -4000 -6300 32700 6000 13000 19000

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