The Statement of Cash

Flows (SCF)

 DATE: November 17, 2020

 PRESENTED BY: MR. FLORANTE P. DE LEON,
MBA,CB,CTT
 Learning Objectives:

 Know the different components that comprise the

statement of cash flows.
 Prepare the statement of cash flows
 The Statement of Cash Flows (SCF)

The Statement of Cash Flows summarizes the cash

receipts and cash disbursements for the accounting
period. It summarizes the cash activities of the
business by classifying cash inflows (receipts) and
cash outflows (payments) into operating, investing
and financing activities
 The Statement of Cash Flows (SCF)

Shows the net increase or decrease of cash in a given

period and the cash balance at the end of the period.
This allows management to assess the ability of the
business to generate cash and project future cash
flows.
 Components of the Statement of Cash Flows

 Classified According to Activities.

Operating activities - the cash inflows (receipts)
and the cash outflows (payments) arising from the
normal operations or the business.
 Components of the Statement of Cash
Flows-Operating Activities
 Receipts of Cash
-Collections from customers for the performance of services or
sale of goods
-Royalties, fees, commissions received
• -Interest, dividends, and other Income received

 Payments of Cash
-to suppliers for services and goods acquired
-employees' salaries
-government licenses and taxes
-interest expense
-other operating expenses
 Components of the Statement of Cash
Flows-Investing Activities
Investing Activities - the cash inflows (receipts) and
the cash outflows (payments) from the purchase and
sale of property and equipment, investment in debt or
trading securities, other business investments, within a
specific reporting period.

An investing activity also refers to cash spent on

investments in capital assets such as property, plant,
and equipment, which is collectively referred to as
capital expenditure, or CAPEX.
 Components of the Statement of Cash
Flows-Investing Activities

Receipts of Cash
-Proceeds on sale/disposal of equipment
-Proceeds on sale/disposal of furniture
Payments of Cash
-For purchase of furniture
-For purchase of equipment
-For purchase of Building
-For purchase of long term investment
 Components of the Statement of Cash
Flows-Financing Activities
Financing Activities - the cash inflows (receipts) and
the cash outflows (payments) from the owners and
creditors of the business. It focuses on how the
business raises capital and pays back its investors. The
activities include issuing and selling stock, paying
cash dividends, adding loans, payment of loans, and
withdrawal.
 Components of the Statement of Cash
Flows-Financing Activities

Receipts of Cash
original and additional investments by owner
proceeds of loan

Payments of Cash
cash withdrawal of owner
payment for the principal balance of loan
 Illustration:

Nhilo Kho Merchandising started business last

October. The following are its transactions. Classify
each transaction as an operating, investing or
financing activity.
Illustration: Nhilo Kho Merchandising
Illustration: Nhilo Kho Merchandising
Illustration: Nhilo Kho Merchandising
Illustration: Nhilo Kho Merchandising
Illustration: Nhilo Kho Merchandising
Illustration No.2: Juan TO GO