0. Sources and Uses of Cash 3.1
LO1
Sources
Cash inflow – occurs when we “sell” something
Decrease in asset account
Increase in liability or equity account
Uses
Cash outflow – occurs when we “buy” something
Increase in asset account
Decrease in liability or equity account
© 2013 McGraw-Hill Ryerson Limited

1. Statement of Cash Flows
Statement that summarizes the sources and uses of cash
Changes divided into three major categories
Operating Activity – includes net income and changes in most current accounts
Investment Activity – includes changes in fixed assets
Financing Activity – includes changes in notes payable, long-term debt and equity accounts as well as dividends
© 2013 McGraw-Hill Ryerson Limited

2. Sample Statement of Cash Flows
Numbers are in thousands
Cash, beginning of year
6,489
Financing Activity
Operating Activity
Increase in Notes Payable
141,217
Net Income
471,916
Increase in LT Debt
517,764
Plus: Depreciation
362,325
Decrease in C/S
-36,159
Increase in Other CL
141,049
Dividends Paid
-395,521
Less: Increase in A/R
-46,127
Net Cash from Financing
227,301
Increase in Inventory
-93,692
Net Decrease in Cash
-3,319
Increase in Other CA
-82,150
Cash End of Year
3,170*
Decrease in A/P
-26,934
Net Cash from Operations
726,387
Investment Activity
Fixed Asset Acquisition
-957,007
Net Cash from Investments
*Difference due to rounding of dividends
Remind students that part of the increase in the C/S account shown on the statement of financial position is the increase in Retained Earnings. That is already incorporated in the net income under operating activity.
Additions to RE = 471,916 – 395,521 = 76,395
Change in C/S = 1,761,044 – 1,648, ,395 = -36,159
© 2013 McGraw-Hill Ryerson Limited