A statement of cash flows has three sections. These are:
-
Operating activities section
-
Investing activities section
-
Financing activities section
Operating, investing and financing activities
constitute the general format of statement of
cash flows. The cash flows from operating
activities section always appear the first,
followed by the investing section and then
financing activities section.
The
individual cash inflows and cash outflows from investing
and financing activities are reported separately. That
is, they are reported gross, not netted against one
another. Thus, cash outflow from the purchase of
property is reported separately from the cash inflow
from the sale of property. Similarly, the cash inflow
from the issuance of debt is reported separately from
the cash outflow from its retirement.
The net
increase or decrease in cash reported during the period
should reconcile the beginning and ending cash balances
as reported in the comparative balance sheets.
the
skeleton format of statement of cash flows is prepared as
follows:
Company Name
Statement of Cash flows
Period Covered
Cash
Flows from Operating Activities: |
|
|
Net income |
|
xxx |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
(List of individual items) |
xx |
|
|
|
|
Net cash flow from operating activities |
|
xxx |
|
|
|
Cash
Flows from Investing Activities: |
|
|
(List of individual inflows and outflows) |
xx |
|
|
|
|
Net cash
provided (used) by investing activities |
|
xxx |
|
|
|
Cash
Flows from Financing Activities: |
|
|
(List of individual inflows and outflows) |
xx |
|
|
|
|
Net cash provided (used) by financing
activities |
|
xxx |
|
|
|
Net
increase (decrease) in cash |
|
xxx |
Cash at
beginning of period |
|
xxx |
|
|
|
Cash at the
end of the period |
|
xxx |
|
|
|
|
The
above format is used when a statement of cash flows is
prepared using
indirect method. When direct method
is used the operating activities section of the
statement of cash flows is prepared in a different way.
Click
here to understand the format under direct method.
|