1. Introduction to Accounting Preparing for a User’s Perspective
What is the standard format for a Statement of Cash Flows and what information does it provide?
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store

2. Statement of Cash Flows
Businesses don’t fail if they:
Just keep it coming
Business
Have enough to pay on time
Do pay on time
Lenders & Creditors

3. Hmmm. What’s going on with their cash?
+ Cash Sources
Statement of Cash Flows
Cash Balance
Cash Flows
- Cash Uses
Creditors, lenders & investors

4. Statement of Cash Flows
For the year ended Income Statement and Statement of Stockholder Equity
Statement of Cash Flows
Balance Sheet
Balance Sheet
+ Cash Sources
- Cash Uses
As of Dec 31, X1
Dec 31, X2
As of

5. Statement of Cash Flow Formulas
+ Cash Inflows – Cash Outflows
Begin. Cash
= End. Cash
ABC Company
Statement of Cash Flows
For the year ended 12/31/X3
1/1/X3
12/31/X3
Cash inflows
Operating activities
Investing activities
Financing activities
= Change in cash
Cash balance
+ Beginning cash
= Ending cash
Cash outflows
What are the General-Purpose Financial Statements - Video Slide 10

6. Operating Activity Cash Flows
Impact current assets and current liabilities
Receipts->
->Payments
To support core business operations

7. Receipts-> Operating Cash Inflows 1) Cash received from customers
That will be $3,000 cash please.
Receipts->
2) Cash dividends received on investments
Increase cash but usually reduce non-cash current assets
3) Cash received for interest on loans
To support core business operations

8. ->Payments Operating Activity Cash Outflows
1) Cash paid to suppliers
2) Cash paid for salaries and wages
Please pay for our scalpels and buy some new ones.
Hoorary!!!! Today is payday.
->Payments
3) Cash paid for utilities
Did you remember to pay the utilities?
Reduce cash and usually reduce current liabilities
4) Interest paid
To support core business operations

9. R Sales-> ->Purchases Investing Activity Cash Flows
Cash paid to purchase and cash received upon sale of long-term assets

10. R Sales-> Investing Activity Cash Inflows
Sales of vehicles, buildings, etc. R
Sales->
Increase cash but usually reduce long-term assets

11. R ->Purchases Investing Activity Cash Outflows
Purchase of vehicles, buildings, etc. R
->Purchases
Reduce cash and usually reduce long-term assets

12. Financing Activity Cash Flows
Receipts->
->Payments
Cash from or used for:
long-term debt
contributed capital

13. Financing Activity Cash Inflows
Issue stock to
Borrow using long-term debt
from
Receipts->
Increase cash and either increase long-term debt or contributed capital

14. Financing Activity Cash Outflows
Dividends paid to and stock repurchased from
Pay off long-term debt to
->Payments
Reduce cash and usually reduce long-term debt, contributed capital, or retained earnings

15. Which business would you want to own?
Which is probably more capable of:
Paying off debt?
Increasing shareholder value?
Paying dividends?

16. This baby’s healthy
+ $65 M
Nothing
(88) M

17. (27) M + 79 M Long-term assets should increase operating cash flows.
Cash from sales used to pay for operating cash flows.
+ 79 M

18. (29) M
+ 18 M

20. Introduction to Accounting Preparing for a User’s Perspective
What is the standard format for a Statement of Cash Flows and what information does it provide?
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store