Content:

State the general rules for determining whether transactions should be

classified as operating ,investing , or financial activities.

Content and form of the statement of cash flows.

For comparing and determination statements of the cash flows from different companies ,
the Financial Accounting Standards Board (FASB) requires that companies follow
prescribed rules for preparing the statement of cash flows .
One of the FASB requirements is that the statements of cash flows be divided into three
sections: Operating activities, Investing activities, and financial activities.

Financing activities are activities that result in changes in the size and composition of the
contributed equity and borrowings of the entity.

Investing activities are the acquisition and disposal of long-term assets and other
investments not included in cash equivalents.

Operating activities are the principal revenue-producing activities of the entity and other
activities that are not investing or financing activities.

Guidelines for determining transactions as Operation, Investing, and Financing.

Operating activities:
o Net income.
o Changes in current assets.
o Changes in noncurrent assets that affect net income (e.g., depreciation).
o Changes in current liabilities (except for debts to lenders and dividends payable).
o Changes in noncurrent liabilities that affect net income.

Investing activities:
o Changes in noncurrent assets that are not included in net income.
Financing activities:
o Changes in the current liabilities that are debts to lenders rather than obligations to
suppliers, employees, or the government.
o Changes in noncurrent liabilities that are not included in net income.
o Changes in capital stock accounts.
o Dividends.

The primary purpose of a statement of cash flows is to provide relevant information about the
cash receipts and cash payments of an enterprise during a period.
Statement of cash flows for a period shall report net cash provided or used by operating,
investing, and financing activities and the net effect of those flows on cash and cash
equivalents during the period in a manner that reconciles beginning and ending cash and
cash equivalents.
A statement of cash flows (SCF) for a period shall report the following:

Net Cash:


Provided or used by operating activities.

 Provided or used by investing activities.

 Provided or used by financing activities.

Noncash investing and financing activities affecting the financial position shall be excluded
from a cash flow statement. (Such transactions should be disclosed elsewhere in the financial
statement).

Statement of the cash flows_____________________________________________

Cash flows From Operating activities



Net income ................................................................................................................................................ $

Add (Deduct) adjustment for difference between net income and cash flows from operating activities:
Depreciation expense (pes), Increase in salaries and accounts payable, Increase in accounts receivable ..........$

Net cash provided by operating activities___________________________________________________________________ $

Cash Flows From Investing activities



Payment for purchase of building, equipment , proceeds from sale of land, at cost ............................... $

Net cash used for investing activities______________________________________________________________________$

Cash Flows From Financial activities



Proceeds from issuance of ordinary shares (bonds), proceeds of dividends/note payable.................... $

Net cash provided by financing activities___________________________________________________________________ $

 Net increase in cash.. $

Cash balance, (month)_____________________________________________________________________________________ $

Investing and financing Activities Not affecting Cash :



Issuance of ordinary shares for land. $

Acquisition of land by issuance of ordinary shares... $

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