Statement of Cash Flow (SCF)

-provides an analysis of inflows and/or outflows of cash

from/to operating, investing and financing activities.
A statement of cash flows generally presents
the sources and utilization of an
organization’s cash and cash equivalents.
A statement of cash flow has three major
sections namely operating, financing and
investing activities.
Each section represents the classification of
the organization’s cash related activities.
 This is a formal statement that classifies
cash receipts (inflows) and cash payments
(outflows) into operating, financing and
investing activities.
A cash receipt is a proof of purchase issued when the buyer has
paid in cash. This cash receipt form is perfect for any industry and
can be provided as proof of payment, or payment received. 
It shows the net increase or decrease in cash
during the period and the cash balance at the
end of the period.
• Operating Activities
• Financing Activities
• Investing Activities
Three Major Sections of the
Statement of Cash Flows
Operating activities are the base-line
cash of activities of the entity related
to its normal operating cycle.
Such activities are related to the primary
revenue-producing activity of the entity.
Operating Activities
Transactions as examples of operating activities:
Investing activities generally result
from acquisition and disposal of non-
current assets.
A business's reported investing activities give insights into
the total investment gains and losses it experienced during
a defined period.

Investing Activities
Transactions as examples of investing activities:
Financing activities arise from
changes in liabilities and owner’s
equity of a business organization.
Refers to the cash inflows and outflows resulting from
the issuance of debt, the issuance of equity, dividend
payments, and the repurchase of existing stock.

Financing Activities
Transactions as examples of investing activities:
According to IAS 7 (IASB 2001), entities are
given an option whether to present the
statement of cash flow using the direct or
indirect method.

Approaches of the Statement of Cash Flows

The direct method presents each major
classification of gross receipts and gross
payments for operating activities. IAS
(IASB, 2001) encourages the use of the
direct method.
Direct Method
The indirect method however, presents the
operating activities starting with the pre-
tax income. It then reconciles the pre-tax
for non-cash income and expenditures.
After which, the movement in current
assets and liabilities are adjusted.
Indirect Method
For the purpose of this text, the direct method will
be used; it is more preferred by IAS 7 (IASB
2001). Furthermore, beginners in preparing the
statement of cash flow will appreciate the said
format.
1. Determine the heading
2. Analyze the Cash Transaction
3. Prepare
Every cash thetransaction
Operating Activities
should Section
be carefully analysed to
4. determinethe
Prepare its Investing
nature, the effect and the
Activities classification or section
Section
All cash
where transactions that will affect net income of profit and
it belongs.
5. Prepare
loss theclassified
Financing
will transactions
All cash be Activities
as operating
that Section
will affectactivities.
the noncurrent assets are
6. classified under
Determine the this
net section.
change in cash, Cash at the
beginning of the period and Cash at the end of the
period.
Preparing the Statement of Cash Flow
Cash transactions of Lopez General Services for December 31, 2019