Statement of cashflow - Coggle Diagram
Statement of cashflow
Cash flows from operating activities
cash flows from transactions that affect the net income of the company.
The direct method
it directly reports cash receipts and cash
payments on the statement of cash flows.
The indirect method
reports cash flows from operating activities by be-ginning with net income and adjusting it for revenues and expenses that do not involve the receipt or payment of cash
in any balance sheet account (including cash) can be analyzed in terms of changes in the other balance sheet accounts.
Gains and losses on the disposal of assets are added to or deducted from net income. Changes in current operating assets and liabilities are added to or subtracted from net income, depending on their effect on cash.
Adjustments to Net Income
revenues and expenses are recorded at different times from when cash is received or paid.
Cash flows from investing activities
cash flows from transactions that affect investments in the noncurrent assets of the company
normally arise from selling fixed assets, investments, and intangible assets.
Building and Accumulated Depreciation—Building
are reported below cash flows from operating activities on the statement of cash flows
Cash Flows from Financing Activities
reports the cash inflows and outflows related to changes in a company’s long-term liabilities and stockholders’ equity.
Dividends and Dividends Payable
Cash dividends paid during the year can also be computed by adjusting the dividends declared during the year for the change in the dividends payable account
Preparing the Statement of Cash Flows
Appendix 1 Spreadsheet (Work Sheet) for Statement of Cash Flows
A spreadsheet (work sheet) may be used in preparing the statement of cash flows
Appendix 2 Preparing the Statement of Cash Flows—The Direct Method
Cash Received from Customers
Cash Payments for Merchandise
Cash Payments for Operating Expenses
Gain on Sale of Land
Cash Payments for Income Taxes
Reporting Cash Flows from Operating Activities—Direct Method
The result of adding the net cash flows from operating, investing, and financing activities is the net increase or decrease in cash for the period