Statement of Cash Flows

> it shows the cash inflows and outflows within the entity.

Operating Activities
1. Current Assets
Investment in Trading Securities > investment in stocks/bonds
Accounts Receivable
Prepaid Expenses > expenses already paid but not yet incurred
Merchandise Inventory
Accrued Income (Accrued Rent Income, Accrued Interest Income)
> money earned but not yet received
2. Current Liabilities
Unearned Income > Money received but not yet earned
Accrued Expenses > expenses not yet paid
Accounts Payable

3. Net Income

Dividend Income > profits received from the corporation if you have shares

EXCEPTION:
Notes Payable - BANK/LOAN

*Kahit within 1 year magmamature ----- Financing Activities

EXCEPTION to THE EXCEPTION:

Interest Expense on Notes Payable - Bank/Loan

* Pero pag interest kahit may Bank or Loan babalik sa Operating Activities

Investing Activites

Non Current Assets: Purchase and Sale of Property, Plant and Equipment
a. Furniture
b. Land
c. Equipment
d. Machinery
Loans Receivable > pag tayo nagpautang not in the normal course of business.

Financing Activities:

1. Non Current Liabilities

a. Mortgage Payable
"may collateral na real property (land and building)"
b. Bonds Payable

2. Equity
a. Dividends Paid
b. Sale of Ordinary Shares Corporation
c. Additional Invetsment
d. Withdrawal of owner Sole Proprietroship/ Partnership
Stock > you gain ownership

Bonds> nagpapautang tayo

Issued Bonds/Notes - ikaw ang debtor (ikaw ang may utang)

Receipt of Bonds/Notes - ikaw ang creditor (sayo may utang)

Direct Method

> the transactions that resulted to cash inflows and outflows

are the ones that are classified as Operating Activities.

a) Cash received from credit customer

b) Payment to a supplier

Additional Exercises
Edison Service Center
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from Operating Activities:
Cash received from salaries and other oeprating expenses
Dividends received on trading securities
Cash Paid for salaries and operating expenses
Payment of interest on promissory note
Payment of interest on loan
Cash flows provided by operating activities

Cash flows from Investing Activities

Sale of an old machine
Payment for the purchase of furniture
Cash flows used in investing activities

Cash flows from Financing Activities

Additional Investment of Edison
Proceeds of Bank Loan
Payment of Principal of Bank Loan
Cash Withdrawal of Owner
Cash flows provided by financing activities
Net Increase in Cash
Add: Cash Balance, Beginning
Cash Balance, Ending

Second Problem - Excel

Cash Balance, Ending
(Cash Balance, Beginning)
Net Decrease in Cash

Third Problem Excel

The difference between direct and indirect method only lies in the operating activities

Kapag indirect method, we always start with net Income

Net Income
(Gain on Sale of Equipment)
(Increase in Inventory)
Increase in Salaries Payable
Bad Debts Expense
Cash flows provided by operating activities

Homework

Shinee Company

Net Income ₱ 2,120,000

Depreciation 240,000
Amortization 80,000
(Gain on Sale of Land) -200,000
Decrease in Accounts Receivable 60,000
Increase in Inventory -120,000
Decrease in Accounts Payable -140000
Increase in Accrued Expenses 160,000
Cash Flows from operating activities ₱ 2,200,000

Onew Company

Net Income 1,360,000

Depreciation Expense 400,000
Increase in Accounts Receivable -120,000
Inventory decrease 280,000
Accounts Payable decrease -80,000
Cash Flows from operating activities 1,840,000

Key Company
 Edison Service Center
Statement of Cash Flows
or the Year Ended December 31, 2015

ating expenses ₱ 186,500

4,890
-84,230
-3,550
-8450
₱ 95,160

₱ 48,200
-59,250
-11,050

₱ 165,430
123,280
-80,000
-16,000
192,710
₱ 276,820
73,180
₱ 350,000
 ₱ 40,000
-100,000
-₱ 60,000

only lies in the operating activities

Step 1; Add back/Deduct items that has no

₱ 15,200 Depreciation Amortization

-3,000 Bad Debts
-1,500 Step 2: Add back/Deduct items na hindi kas
2,850
10,000 Step 3: Add/Deduct the changes in the bala
₱ 13,550
Increase in Asset > Deduct sa net income
Decrease in Asset > Increase sa net income

Example: Accounts Receivable

Kapag tumataass ang accounts receivable,
pinapautang, so mas nawawala ang cash

Increase in Liability > ADD sa net income

Decrease in Liability > Less sa net income

Net Income = Revenues - Expense

Indirect Method

> the transactions that result to cash inflows and outflows

for operating activities are not presented
> ang makikita natin is yung increases/decreases sa current assets/liabilities

a) Decrease in Accounts Receivable

b) Decrease in Accounts Payable

Additional Investment > Capital

educt items that has no actual cash flow

Amortization

educt items na hindi kasama sa operating activities

t the changes in the balances of current assets and current liabilities

Deduct sa net income

> Increase sa net income

Receivable
ng accounts receivable, ang idea is mas marami kang
as nawawala ang cash

> ADD sa net income

y > Less sa net income