FABM 2:

Lesson 4
The STATEMENT OF
 What is the Statement of Cash Flow?
Generally presents the sources and
utilization of company’s cash and cash
equivalents. It includes Cash Inflows
and Outflows from Operating,
Investing and Financing Activities.
 OPERATING ACTIVITIES
Are the baseline cash activities of the entity related to its normal
operating cycle. (Please refer to Cash Ledger)
Cash Inflows (Add) Cash Out Flows (Less)
Cash Receipts from Revenues Cash payment to expenses
Cash Receipts from other Revenues Cash payment to payables
Cash Receipts from collection of Receivables Cash payment to income taxes
Interest Received Interest paid
 INVESTING ACTIVITIES
Generally results from acquisition and disposal of non-current
assets. (Please refer to Cash Ledger)
Cash Inflows (Add) Cash Out Flows (Less)
Cash Receipts from sale of property, Cash Payment to acquire property, plant
plant and equipment and equipment
Cash Receipts from sale of intangible Cash payment to acquire intangible
assets assets
Cash Receipts from sale of long-term
assets
 FINANCING ACTIVITIES
Usually arise from changes in non-current liabilities and owner’s
equity of business organization. (Please refer to Cash Ledger)
Cash Inflows (Add) Cash Out Flows (Less)
Cash Investment from owners Cash distribution to owners(withdrawals)
Cash proceeds from bank loans Repayment of bank loans
 Preparation of Statement of Cash Flow
No. STEPS
1 Determine the heading
2 Analyze the cash transaction;( refer to Cash Ledger) classify whether
Operating, Investing or Financing Activities
3 Prepare Operating Activities Section
4 Prepare the Investing Activities
5 Prepare Financial Activities
6 Determine the ending cash balance; must tally to the Cash Balance of SFP