Session-6-CPTC-31081-Slides_Statement-of-Cash-Flows.pptx -...

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2 Class #6 Statement of cash flows 1. Structure of the statement of cash flows 2. Operating cash flow: direct and indirect method 3. Reading the statement of cash flows © CPTC 31081 Financial Accounting 2020-2021
3 1. Structure of the statement of cash flows The SCF explains The change of cash and cash equivalents during the period, and The cash and cash equivalents at the end of the period ( Cash comprises both cash on hand and deposits. Cash equivalents are short-term, highly liquid investments, readily convertible to known amounts of cash, that are subject to insignificant risks of changes in value) Cash flow presented in 3 categories Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Problems in classifying certain cash flows Income tax : operating Interests and dividends received : operating or investing Interests and dividends paid : operating or financing © CPTC 31081 Financial Accounting 2020-2021
4 1. Structure of the statement of cash flows Operating cash flow (I) Receipts from investing activities Payments from investing activities = Cash flow from investing activities (II) Receipts from financing activities Payments from financing activities = Cash flow from financing activities (III) Net cash flow (IV = I + II + III) Cash and cash equivalents at the beginning of the period (CN-1) Cash and cash equivalents at the end of the period (CN = CN-1 + IV) © CPTC 31081 Financial Accounting 2020-2021
5 1. Structure of the statement of cash flows Activities Cash inflows (receipts) arising from Cash outflows (payments) arising from Operating activities (main revenue- producing activities) Sale of goods and rendering of services to

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