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Com 36 cash flow statement managing budgets 62 cash

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Unformatted text preview: es for cash income. Forms of Cash Common Use(s) of Cash Operations Cash Dividends New loans Loan Repayment New stock issues or owner investment Stock repurchase Property or equipment sale Property or equipment purchase Sale of capital or long-term asset Purchase of capital or long-term asset Figure 6: Sources and Uses of Cash Income Download free ebooks at bookboon.com 37 Cash Flow Statement Managing Budgets 6.3 Preparing the Cash Flow Statement To prepare the Cash Flow Statement, you will need to look at the difference between the Balance Sheets from the beginning and the end of the accounting period. You will also need to look at the Net Income from the same period. Table 7 shows a sample of a Cash Flow Statement with a twist – the fourth column tells you where the information came from. AnyCom Statement of Cash Flow For the month ending January, 20XX Cash Flow from Operations Net Income Depreciation Increase in Accounts Receivable Decrease in Inventory Decrease in Accounts Payable $6,700 Both from the Income Statement 250 -400 From the differences between the December and January Balance Sheets 1,500 -625 Net Cash Flow from Operations $7,425 Cash Flow from Investing Equipment Purchase -$2,200 Net Cash Flow from Investing -$2,200 The difference between the equipment entry in December 31 and January 31 minus equipment depreciation for the month. The negative entry indicates an equipment purchase of $2,200. Download free ebooks at bookboon.com 38 Cash Flow Statement Managing Budgets Cash Flow from Financing Loan Payments From the difference between the December and January Balance Sheets -$800 Net Cash Flow from Financing -$800 Net Increase (Decrease) in Cash $1,200 Cash in the Beginning of Period $4,400 Cash at the End of the Period $6,600 Equals the amount on the January 31st Balance Sheet Figure 7: Sample Cash Flow Statement with Information on Source The amount given for the increase in cash is, at least partly, due to the conversion of accrual accounts into actual cash value. At this point, you should be able to understand where the amounts in the financial statements come from and how to read the statements. However, you should also realize that it can take years to learn and fully understand accounting and bookkeeping processes. As you get more practice reading (and possibly creating)...
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