Statement of Cash Flows

Cash
•is a money owned by the company.
✓Cash account generally represent cash
receipts and cash disbursements.

cash receipts
1.Cash sales to customers
2.Collection of customer accounts
3.Loan and other borrowings
4.Owner’s contributions
 Cash disbursements.
1. Business Expenses
2. Purchases of inventories and other assets
3. Liabilities to creditors
4. Dividends to owners
Three major activities of the
business
1. Operating
2. Investing
3. Financing
1. Operating activities
•are primary delivered from the main
revenue producing activities of the
business.
•Collection from customers will be reported
on the SCF on the year when cash is
received.
•Cash disbursement for expenses are
reported on SCF on the year payments are
made.
 ❖Positive cash flows from operations
suggests that there is excess cash that can be
used to purchase long-term assets, pay debts
or distribute to owners.

Cash flow transactions under operating

activities:
a. Cash received from customers (cash
receipts from sale of goods and rendering
of service) (+)
b. Cash received from royalties, fees,
commissions, and other revenue (+)
c. Cash payments to suppliers of goods and
services (-)
d. Cash payments to employees (-)
e. Cash payments for other operating
expenses (income taxes, interest paid) (-)
f. Interest received (+)
g. Dividends received (+)
2. Investing Activities
• are cash used for acquisition of property,
plant, and equipment, intangible assets and
other long-term assets as well as cash
proceeds from the disposals of long-term
assets.
Cash flow transactions under investing
activities:
a. Cash payments to acquire property, plant, and
equipment, intangibles and other long-term assets (-)

b. Cash payments to acquire intangible assets(-)

c. Cash receipts from sale of property, plant, and
equipment (+)

d. Cash receipts from sale of intangible assets (+)

e. Cash receipts from sale of long-term assets (+)
 3. Financing activities
• This section reports cash received and cash
paid to equity owners and long-term creditors.
Cash flow transactions under financing
activities:
a. Cash investments from owners(capital
contribution from owners) (+)
b. Cash proceeds received from issuing notes or
getting a long-term loan from a bank (+)
c. Cash distributions to owners (-)
d. Repayment of bank loan (-)
Decision Rule in Determining Classification of
Cash Transactions

1. Operating – Profit or Loss

•Items that will affect net income or profit or loss
2. Investing – Non-current Asset
•Items affecting noncurrent assets
3. Financing – Equity and Non-current Liability
•Items affecting non-current liabilities and equity
Royalty
•An amount of money that is paid to the original
creator of a product, book, or piece of music based
on how many copies have been sold.

➢Patent
•A government authority or license conferring a
right to exclude others from making, using, or
selling invention.
➢Copyright
•Is a legal right created by law of a country that
grants the creator of an original work exclusive
rights for its use and distribution.
•Novels, poetry, movies, songs, computer software,
and architecture
➢Trademark
•A symbol, word, or words legally registered or
established by use as representing a company or
product.
❖Intellectual Property Office of the Philippines
 Preparing the Statement of Cash Flows
1. Determine the heading
Uy Law Office
Statement of Cash Flows
For the period Ended December 31, 2015
2. Analyze the cash transactions
Cash -1001
Dec. 1 Payment of Business
Dec. 1 Cash investment of owner 500,000 permits 10,000
Dec. 1 Proceeds from bank loan 100,000Dec. 1 Payment for annual rent 120,000
Dec. 8 Collection from
customers 37,500Dec.2 Purchase of office Supplies 5,000
Dec. 15 Collection from
customers 135,000Dec. 8 Purchase of Equipment 36,000
Dec. 22 Collection from
customers 35,000Dec. 17 Cash withdrawal of owner 25,000
Dec. 31 Payment of Salaries 23,000
807,500 219,000
588,500
3. Prepare the operating activities
Cash -1001
Dec. 1 Payment of Business
Dec. 1 Cash investment of owner 500,000 permits 10,000
Dec. 1 Proceeds from bank loan 100,000Dec. 1 Payment for annual rent 120,000
Dec. 8 Collection from
customers 37,500Dec.2 Purchase of office Supplies 5,000
Dec. 15 Collection from
customers 135,000Dec. 8 Purchase of Equipment 36,000
Dec. 22 Collection from
customers 35,000Dec. 17 Cash withdrawal of owner 25,000
Dec. 31 Payment of Salaries 23,000
807,500 219,000
588,500

CASH FLOW FROM OPERATING ACTIVITIES

Cash receipts from rendering of service 207,500
Cash payments to suppliers of goods and services (158,000)
Net cash flow from operating activities 49,500
4. Prepare the investing activities
Cash -1001
Dec. 1 Payment of Business
Dec. 1 Cash investment of owner 500,000 permits 10,000
Dec. 1 Proceeds from bank loan 100,000Dec. 1 Payment for annual rent 120,000
Dec. 8 Collection from
customers 37,500Dec.2 Purchase of office Supplies 5,000
Dec. 15 Collection from
customers 135,000Dec. 8 Purchase of Equipment 36,000
Dec. 22 Collection from
customers 35,000Dec. 17 Cash withdrawal of owner 25,000
Dec. 31 Payment of Salaries 23,000
807,500 219,000
588,500

CASH FLOW FROM INVESTINGG ACTIVITIES

Cash purchase of Equipment (36,000)
5. Prepare the Financing Activities
Cash -1001
Dec. 1 Payment of Business
Dec. 1 Cash investment of owner 500,000 permits 10,000
Dec. 1 Proceeds from bank loan 100,000Dec. 1 Payment for annual rent 120,000
Dec. 8 Collection from
customers 37,500Dec.2 Purchase of office Supplies 5,000
Dec. 15 Collection from
customers 135,000Dec. 8 Purchase of Equipment 36,000
Dec. 22 Collection from
customers 35,000Dec. 17 Cash withdrawal of owner 25,000
Dec. 31 Payment of Salaries 23,000
807,500 219,000
588,500
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from cash investment of owners 500,000
Proceeds from bank loans 100,000
Payments to owners (25,000)
Net Cash flow from financing activities 575,000
6. Determine the Ending Cash Balance
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from rendering of service 207,500
Cash payments to suppliers of goods and services (158,000)
Net cash flow from operating activities 49,500
CASH FLOW FROM INVESTING ACTIVITIES
Cash receipts from rendering of service (36,000)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from cash investment of owners 500,000
Proceeds from bank loans 100,000
Payments to owners (25,000)
Net Cash flow from financing activities 575,000
NET INCREASE IN CASH 588,500
 Uy Law Office
Statement of Cash Flows
For the period Ended December 31, 2015
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from rendering of service 207,500
Cash payments to suppliers of goods and services (158,000)
Net cash flow from operating activities 49,500

CASH FLOW FROM INVESTING ACTIVITIES

Cash purchase of Equipment (36,000)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from cash investment of owners 500,000
Proceeds from bank loans 100,000
Payments to owners (25,000)
Net Cash flow from financing activities 575,000

NET INCREASE IN CASH 588,500

CASH AT THE BEGINNING OF THE PERIOD -
CASH AT THE END OF THE PERIOD 588,500
 Cash
Debit Credit
January 1, 2011 ₱120,000
15-Jan Cash from cash sales 1,000 2-FebPayment to suppliers 22,000
18-Feb collection of AR 20,000 16-MarPayment of utility bills 7,890
payment to
28-Mar cash from cash sales 1,500 15-Apr employees 35,000
Acquisition of
20-May collection of AR 34,000 1-Jun computers 60,000
17-Jun Cash from cash sales 5,600 1-JulRent payments 25,000
Additional contribution
17-Jul from owner 75,000 3-AugPayment to suppliers 16,700
Proceeds from bank
1-Sep borrowing 150,000 31-DecLoan payment 18,760
15-OctCollection of AR 13,000 31-DecInterest payment 7,500
21-Novcollection of AR 44,600 31-DecOwner's Drawings 4,000
Total debits 464,700 Total Credit 196,850
December 31, 2011 ₱ 267,850
 ABC Company
Statement of Cash Flows
For the year ended December 31, 2011

Cash flow from operating activities

Receipts from customers ₱119,700
Payments to suppliers (38,700)
Payments to employees (35,000)
Rent payments (25,000)
Utility payments (7,890)
Interest payments (7,500)
Net cash flow provided by operating activities ₱5,610

Cash flow from investing activities

Acquisition of computers (60,000)
Net cash flow used in investing activities (₱60,000)
Cash flow from financing activities
Additional contribution from owner 75,000

Owner's drawings (4,000)

Proceeds from bank borrowing 150,000

Loan payment (18,760)

Net cash flow provided by financing
activities ₱ 202,240
Net change in cash ₱147,850
Cash and cash equivalents, January 1, 2011 120,000
Cash and cash equivalents, December 31,
2011 ₱267,850
 Quiz
The cash account of XYZ Company has a beginning balance of
₱129,927.50.The table below show the summarized transactions
from the cash account of XYZ Company.
Cash received from customers ₱ 725,175.00
Payment to suppliers 300,547.50
Payments for other operating expenses 58,850.00
Salaries paid 19,992.50
Purchase of equipment 253,000.00

Sale of delivery equipment 6,875.00

proceeds from sale of computer equipment 42,762.50
Withdrawals of owners 229,350.00
Proceeds from bank loan 82,500.00
Contributions of Owners 137,500.00

Interest paid 8,085.00

 Quiz
The cash account of XYZ Company has a beginning balance of
₱129,927.50. Its year end balance stands at ₱254,925. The table
below show the summarized transactions from the cash account
of XYZ Company.
Cash received from customers ₱ 725,175.00
Payment to suppliers 300,547.50
Payments for other operating expenses 58,850.00
Salaries paid 19,992.50
Purchase of equipment 253,000.00

Sale of delivery equipment 6,875.00

proceeds from sale of computer equipment 42,762.50
Withdrawals of owners 229,350.00
Proceeds from bank loan 82,500.00
Contributions of Owners 137,500.00

Interest paid 8,085.00

1. Cash received from customers ₱ 725,175.00
2. Payment to suppliers 300,547.50
3. Payments for other operating expenses 58,850.00
4. Sale of delivery equipment 6,875.00
5. proceeds from the sale of computer
equipment 42,762.50
6. Withdrawals of owners 229,350.00
7. Salaries paid 19,992.50
8. Proceeds from bank loan 82,500.00
9. Contributions of Owners 137,500.00
10. Interest paid 8,085.00
11. Collection of Accounts Receivable
12. Purchase of equipment 253,000.00
13. Payment of acquired Stocks 100,000

14. Payment of Bought Franchise 500,000