GENESIS

Statement of Cash Flows

For Year Ended December 31, 2011

Cash flows from operation activities

Net income
Income tax expense
Income before taxes

38000
15000
53000

Adjustments to reconcile income to net cash provided by operating activities

Loss on sales of property, plant and equipment
Gain on retirement of notes
Depreciation expense
Interest expense
Increase in accounts receivable
Increase in inventory
Increase in prepaid expenses
Decrease in accounts payable
Interest paid
Income taxes paid

6000
(16000)
24000
7000
(20000)
(14000)
(2000)
(5000)
(8000)
(5000)

NON-OPERATING
NON-CASH OPERATING
CASH OPERATING
Under IFRS, interest and dividends
received, interest paid and income
taxes must be separately shown1
UMLAUF COMPANY
Statement of Cash Flows
1 Since interest and dividend revenues are added to derive income amount,
adjustments involve deducting these amounts from income. Interest expenses
are added to income to cancel the earlier deduction.

For Year Ended December 31, 2011

Cash flows from operation activities

Net income
Income tax expense
Income before taxes

60150
13725
73845

Adjustments to reconcile income to net cash provided by operating activities

Loss on sales of equipment
Loss on retirement of bonds2
Depreciation expense
Decrease in accounts receivable
Increase in inventory
Increase in prepaid expenses
Decrease in accounts payable3
Income taxes paid
Net Cash provided by operating activities

3300
825
25500
5700
(9525)
(1950)
(4950)
(13050)
79725

NON-OPERATING
NON-CASH OPERATING
CASH OPERATING

Income tax
13050

4425

PAID

13725

-----------------------------5100
Be aware of the assumption (d)

2 Bond is non-operating, it is financing. And in the example, it is shown under

other gains in I/S.
3 Plus or minus, be careful.

 The balance of retained earnings is affected by dividend declarations

and net income

CLOSING NET INCOME to Retained Earnings

Dr Income Summary
Cr R/E
Dividend payable
18750
STEP 3

4500
14250
STEP 2
0 you can find this on B/S

Retained earnings
Declared Dividend 14250 (balancing
figure)
STEP 1

62100

60150
108000 you can find this on B/S

In this case, we assume dividend payable as operating activities, then:

79725
Dividend paid
(18750)
Net Cash provided by operating activities
60975