STATEMENT

OF CASH
FLOWS
WHAT IS A STATEMENT OF CASH FLOW ?
Cash is important assets. It is account
affected by many transaction. The debit
and credit side of the cash is generally
represent cash receipt and cash
disbursements respectively.

SCF is the financial statement that

explains the net change in cash for the
year .

SCF is dated “for the year ended ”

 STATEMENT OF CASH FLOW
Cash flows from Operating activities
Cash transactions xxx
Net cash provided by ( used in ) operating activities xxx

Cash flows from Investing activities

Cash transactions xxx
Net cash provided by ( used in ) investing activities xxx

Cash flows from Financing activities

Cash transactions xxx
Net cash provided by ( used in ) financial activities xxx
Net increase (decrease ) in cash and cash equivalent xxx

Cash and cash equivalents at the beginning of the year xxx

Cash and cash equivalent at the end of the year xxx
SECTIONS OF THE STATEMENT OF CASH FLOW

 The SCF reports cash flow

transactions during the year classified
by Operating , Investing , Financing.
OPERATING ACTIVITIES
 Operating activities are related to the main revenue –
producing activities of the business .
The following are examples of cash flow transaction
reported under operating activities :
A. Cash received from customers ( Cash receipt from the sales
of good and services )
B. Cash received from fees , commission , and other income
C. Cash payments to suppliers
D. Cash payments to employees
E. Cash payments for other operating expenses
F. Interest payments
INVESTING ACTIVITIES
 Cash transaction related to acquisition and disposal
of long term assets such as property , plant , and
equipment , and intangible assets are classified as
investing activities .
The following are examples of cash flow transaction
reported under investing activities :
A. Cash payments to acquire property , plant , equipment ,
intangibles and other long term assets .
B. Cash receipt from sale of property , plant , equipment ,
intangibles and other long term assets .
C. Cash loans made to other parties ( long term note receivable )
D. Cash collection on long term note receivable
FINANCING ACTIVITIES
 Cash transaction with equity owners and
creditors are reported as financing activities.

The following are examples of cash flow

transaction reported under financing activities :
A. Cash received from issuing shares ( or capital contribution
from owners ).
B. Cash received from issuing notes or getting a long–term
loan from a bank
C. Cash dividends distributed to shareholders
D. Cash withdrawals of owners
E. Cash payments for principal of long term loan .
Table 1:

T-account of Cash of ABC Company

Cash
Debit Credit
January 1, 20X1 120,000
1/15 Cash from cash sales 1,000 2/02 Payment to supplier 22,000
2/18 Collection of *AR 20,000 3/16 Payment of utility bills 7,890
3/28 Cash from cash sales 1,500 4/15 Payment to employees 35,000
5/20 Collection of *AR 34,000 6/01 Acquisition of computers 60,000
6/17 Cah from cash sales 5,600 7/01 Rent Expenses 25,000
7/17 Additional contribution 75,000 8/03 Payment to suppliers 16,700
from owner
9/01 Proceeds from bank 150,000 12/31 Loan Payment 18,760
borrowing
10/15 Collection of *AR 13,000 12/31 Interest Payment 7,500
11/21 Collection of *AR 44,000 12/31 Owner’s Drawing 4,000

Total debits 464,700 Total credit 196,850

December 31, 20X1
Table 2: Summarizing Like Transactions and Classifying
Debit Credit
1/15 Cah from cash sales 1,000
2/18 Collection *AR 20,000
3/28 Cash from cash sales 1,500
5/20 Collection of *AR 34,000
6/17 Cash from cash sales 5,600
10/15 Collection of *AR 13,000
11/21 Collection of *AR 44,600
119,700
2/02 Payment to suppliers 22,000
8/03 Payment to suppliers 16,700
38,700

4/15 Payment to employees 35,000

7/01 Rent payments 25,000

3/16 Payment of utility bills 7,890

12/31 Interest Payment 7,500

6/01 Acquisition of computers 60,000

7/17 Additional contribution from owner 75,000

12/31 Owner’s drawing 4,000
9/01 Proceeds from bank borrowing 150,000
12/31 Loan payment 18,760
Table 3: Statement of Cash Flows
ABC Company
Statement of Cash Flows
For the year ended December 31, 20X1

Cash flow from operating activities

Receipts from customers $119,700
Payments to suppliers (38,700)
Payments to employees (35,000)
Rent payments (25,000)
Utility payments (7,890)
Interest payments (7,500)
Net cash flow provided by operating activities $5,610

Cash flow from investing activities

Acquisition of computers (60,000)
Net cash flow used in investing activities (60,000)

Cash flow from financing activities

Additional contribution from owner 75,000
Owner’s drawings (4,000)
Proceeds from bank borrowing 150,000
Loan payment (18,760)
Net cash flow provided by financing activities $202,240
Net change in cash $147,850
Cash and cash equivalents, January 1, 20X1 120,000
Cash and cash equivalents, December 31, 20X1 $267,850
 Example 1: Collection from Customer
Excerpt from the 2 Statements of Financial Position:
December December 31, 20X0
31,20X1
Accounts Receivable $18,400 $10,000

December 31, 20X1 Statement of Comprehensive Income revealed

the following:

Credit sales $120,000

Cash sales 8,100

Determine the (1) collection from credit sales and (2) total collection
from customers.
 Answer

AR. Customer
Beg. Credit AR, End
payment
Balance Sales Balance
s