CASH FLOW INDIRECT METHOD
Instructions to record the changes in cash flow between periods.
Preparing a Cash Flow Statement for Fashion Retailers, Inc using a
Instructions: You will need a small calculator to complete the
1) From the information given on the Income Statement prepare entries
the changes necessary to reconcile net income with cash flow from
After entering the adjustments from analyzing the Income Statement,
proceed to make additional reconciling entries for Non-current items and
Changes in Current Assets and Current Liabilities.
Once you have determined Cash Flow from Operations continue on by
determining cash flow from investing.
The final determination is to calculate the cash flow from Financing.
The summation of all changes to cash must end up being the same as the
cash balance 12/31/05 as shown on the Comparative Balance Sheets.
As a final step in preparing the Cash Flow Statement determine if any
Noncash investing and financing transactions need to be reported on the
bottom schedule. If so, describe the noncash items in a manner that
anyone reading the report will understand the future impact on cash
There are a number of potential adjustments or entries on this
standardized form that may not be needed. Use those pre-determined
descriptions that MOST CLOSELY describe the adjustment or entry needed
to determine cash flow.
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