Question

purposes of the Income Statement, the Balance Sheet and the Statement of Cash Flows. What information is shown on the Statement of Cash Flows that is not reported on either the Income Statement or the Balance Sheet?

Describe some typical items shown in the operating section of a Statement of Cash Flows.

Describe some typical items shown in the investing section of a Statement of Cash Flows.

Describe some typical items shown in the financing section of a Statement of Cash Flows.

Describe some typical items show in Noncash Investing and Financing reported on a Statement of Cash Flows.

Answer 1

A. Cash flow Statement is prepared on Cash inflow and outflow basis. But Profit and Loss Account and Balance Sheet is prepared on Accrual concept basis. Hence following are few information shown on statement of cash flows that is not reported on either income statement or Balance Sheet

• Cash Receipts from customers during the year
• Cash payments to vendors during the year
• Cash payment of expenses like salaries, wages, operating expenses

B. Typical items showing in Operating section of Statement of Cash flows (Direct method)

• Cash received from customers
• Cash payments to suppliers
• Payment of salaries to employees
• Payment of income taxes
• Payment of interest

Typical items showing in Operating section of Statement of Cash flows (Indirect method)

• Adjustments for non financial items like Depreciation, profit or loss on sale of assets, amortization, etc
• Changes in Working capital- Accounts Receivable, Inventory, Prepaid expenses, Accounts payable, Accrued Liabilities
• Payment of Interest
• Payment of Taxes

C. Typical items showing in Investing section of Statement of Cash flows

• Purchase of Fixed Assets
• Sale of Fixed Assets
• Income received on investments
• Sale proceeds of Investments

D. Typical items showing in Financing section of Statement of Cash flows

• Issue of Common shares
• Repayment of Long term notes
• Availing bank loans
• Payment of Dividend

E. Typical items show in Non Cash Investing and Financing reported on a Statement of Cash Flows

Non Cash Investing

• Purchase of Fixed Assets by issue of common shares
• Purchase of Assets by issue of long term notes

Non Cash Financing

• Conversion of Long term debt to Common shares
• Payment of dividend through stock dividends