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CHAPTER SIX APPENDIXSTATEMENT OF CASH FLOWS
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STATEMENT OF CASH FLOWSFourth financial statementExplains...what
the business did to generate cash andhow the cash was
usedCategorizes all cash transactions into three types:Operating,
Investing, and Financing
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OPERATING ACTIVITIESRelated to the revenues and expenses
reported on the Income StatementExamples:Cash received from
customersCash paid for wagesCash paid for rentCash paid for
insurance
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INVESTING ACTIVITIES Those transactions involving the purchase
and sale of long-term assets, lending money, and collecting the
principal of the related loansExamples:Cash paid to purchase
equipmentCash received from sale of old equipment
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FINANCING ACTIVITIESThose transactions dealing with the exchange
of cash between the business and its owners and
creditorsExamples:Investment of cash by ownerOwners withdrawalsCash
paid to repay principal on a loan
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ANALYSIS OF TRANSACTIONSCASHAmt.Class.EventEventClass.Amt.Invst.
by JessicaFinancing2,000This is a transaction with the
ownerFINANCING ACTIVITY
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ANALYSIS OF
TRANSACTIONSCASHAmt.Class.EventEventClass.Amt.Invest. by
JessicaFinancing2,000This is a transactioninvolving long-term
assetsINVESTING ACTIVITYPurch. Del. Eq.1,200Investing
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ANALYSIS OF
TRANSACTIONSCASHAmt.Class.EventEventClass.Amt.Invest. by
JessicaFinancing2,000This transaction involves a creditorFINANCING
ACTIVITYPurch. Del. Eq.1,200InvestingMade loan pmtFinancing300
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ANALYSIS OF
TRANSACTIONSCASHAmt.Class.EventEventClass.Amt.Invest. by
JessicaFinancing2,000Purch. Del. Eq.1,200InvestingMade loan
pmt.Financing300This transaction involvesan expense..OPERATING
ACTIVITYRecd for servicesOperating500
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ANALYSIS OF
TRANSACTIONSCASHAmt.Class.EventEventClass.Amt.Invest. by
JessicaFinancing2,000Purch. Del. Eq.1,200InvestingMade loan
pmt.Financing300The remaining transactionsare categorized in the
same mannerRecd for servicesOperating500
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ANALYSIS OF TRANSACTIONSCASHAmtClass.EventEventClass.AmtInvest.
by JessicaFinancing2,000Purch. Del.
Eq.1,200InvestingOperating500Made loan pmt.Financing300Recd for
servicesRecd for servicesRecd for
servicesOperatingOperating570430200OperatingPaid office
rent50OperatingOperatingOperating80200Paid tele. billPurch.
suppliesPd. for insurance300InvestingPurch. Del.
Equip650OperatingPaid wages150FinancingWithdrawal
3,5003,130370Bal.From this analysis we can prepare a Statement of
Cash Flows.
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Jessica Janes Campus DeliveryStatement of Cash FlowsFor Month
Ended June 30, 20--Cash flow from operating activities:Operating
Activities are shown first.
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Cash flow from operating activities:Cash received from customers
for services$1,500First item listed is the inflow of cash from
customers.
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Cash flow from operating activities:Cash received from customers
for services$1,500Next the outflows of cash are listed.( ) are used
to indicate the negativeeffect on the cash flow. Cash paid for
wages$ (650)Cash paid for rent(200)Cash paid for supplies(80)Cash
paid for telephone(50)Cash paid for insurance(200)
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Cash flow from operating activities:Cash received from customers
for services$1,500Since operating activities are the main purpose
of the business, it is important to be able to generate positive
cash flows from operating activities.Cash paid for wages$ (650)Cash
paid for rent(200)Cash paid for supplies(80)Cash paid for
telephone(50)Cash paid for insurance(200)(1,180)Total cash paid for
operationsNet cash provided by operating activities$320
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Cash flow from operating activities:Cash received from customers
for services$1,500Cash paid for wages$ (650)Cash paid for
rent(200)Cash paid for supplies(80)Cash paid for telephone(50)Cash
paid for insurance(200)(1,180)Total cash paid for operationsNet
cash provided by operating activities$320Cash flows from investing
activities:Investing activitiesare shown next.
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Cash flow from operating activities:Cash received from customers
for services$1,500Cash paid for wages$ (650)Cash paid for
rent(200)Cash paid for supplies(80)Cash paid for telephone(50)Cash
paid for insurance(200)(1,180)Total cash paid for operationsNet
cash provided by operating activities$ 320Cash flows from investing
activities:Cash paid for delivery equipment$ (1,500)Net cash used
for investing activities(1,500)Financing activities are shown
last.Cash flows from financing activities:
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Cash flow from operating activities:Cash received from customers
for services$1,500Cash paid for wages$ (650)Cash paid for
rent(200)Cash paid for supplies(80)Cash paid for telephone(50)Cash
paid for insurance(200)(1,180)Total cash paid for operationsNet
cash provided by operating activities$ 320Cash flows from investing
activities:Cash paid for delivery equipment$ (1,500)Net cash used
for investing activities(1,500)Cash flows from financing
activities:Cash investment by ownerCash withdrawal by
owner2,000(150)Payment made on loan(300)1,550Net cash provided by
financing activities
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Cash flow from operating activities:Cash received from customers
for services$1,500Cash paid for wages$ (650)Cash paid for
rent(200)Cash paid for supplies(80)Cash paid for telephone(50)Cash
paid for insurance(200)(1,180)Total cash paid for operationsNet
cash provided by operating activities$ 320Cash flows from investing
activities:Cash paid for delivery equipment$ (1,500)Net cash used
for investing activities(1,500)Cash flows from financing
activities:Cash investment by ownerCash withdrawal by
owner2000(150)Payment made on loan(300)1,550Net cash provided by
financing activitiesNet increase in cash$370The sum of the inflows
and outflows from operating, investing, and financingactivities
equals the change in the cash account balance this period.Beg.
balance $0 Ending balance $370INCREASE of $370
