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Cash Flow Statements

The document discusses the statement of cash flows which provides detailed information about cash inflows and outflows classified into three activities: operating, investing, and financing. Operating activities include cash from revenues and payments for expenses. Investing activities include cash from sale of assets and purchases of property, plant, and equipment. Financing activities include cash from borrowing and repayment of bank loans.

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Francine Kye DelaCruz
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8 views14 pages

Cash Flow Statements

The document discusses the statement of cash flows which provides detailed information about cash inflows and outflows classified into three activities: operating, investing, and financing. Operating activities include cash from revenues and payments for expenses. Investing activities include cash from sale of assets and purchases of property, plant, and equipment. Financing activities include cash from borrowing and repayment of bank loans.

Uploaded by

Francine Kye DelaCruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Statement of Cash Flows

 Cash is the lifeblood of business

 Without Cash, the business would not be able to


smoothly operate.

 Therefore, at anytime, the business should be liquid so


that they would have cash to spend on their immediate
requirement , like payment for supplies, salaries, utilities
and payment for short term debts.

 Therefore , proper monitoring and planning of Cash is


very important.

 Therefore, a report which provide a detailed information


about cash is very important.
Statement of Cash Flows
 Gives you a detailed information about the activities related to
cash, in terms of INFLOW AND OUTFLOW

 INFLOWS are the cash received by the business

 OUTLOWS are the cash used for payment by the business.

 The information presented in the Statement of Cash Flows are


purely cash transactions and activities.
 In the Statement of Cash Flows , activities
related to Cash are classified into three 3
major classification

(1) OPERATING ACTIVITIES


(2) INVESTING ACTIVITIES
(3) FINANCING ACTIVITIES
OPERATING ACTIVITIES
CASH INFLOWS are from:

(1) Collection of Cash basis revenues


(2) Collection of Accounts Receivables and
Notes Receivables related to revenues
earned.
(3) Cash collection of interest income on
promissory notes
(4) Cash collection of dividend income, rent
income and other income.
OPERATING ACTIVITIES
CASH OUTFLOWS are for:

(1) Payment of Cash for Operating Expenses


( like, utilities, salaries, supplies, gasoline… )
(2) Payment of Cash for Accounts Payable and
Notes Payable arises from operating
expenses
(3) Payment of Cash for interest expenses on
Notes Payable, Bonds Payable, Mortgage
Payable.. )
INVESTING ACTIVITIES

 These are cash inflows and outflows related to


investment activities of the business. These are cash
transactions related to capital expenditures of the
business and purchase of trading securities.
INVESTING ACTIVITIES
CASH INFLOWS are from:

(1) Cash collection from sale of old PPE


(2) Cash collection from sale/ retirement of
investment in stocks and (short terms/long
term)
INVESTING ACTIVITIES
CASH OUTFLOW are for:

(1) Cash payment for cash purchases of PPE


(2) Cash payment for Accounts Payables and
Notes Payable related to purchase of PPE
(3) Cash payment for the purchases of
investment in stocks and bonds
FINANCING ACTIVITIES

CASH INFLOW are from:

(1) Cash received from proceeds from Bank


borrowings ( Notes Payable, Loans Payable,
Mortgage Payable )

(2) Cash received from personal investment of


the Owner to the business.
FINANCING ACTIVITIES
CASH OUTFLOWS are for:

(1) Payment of Bank loans

(2) Payment for cash drawings of the owners

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