ACCTBA1: STATEMENT OF CASH FLOWS
o Investing activities
 A statement of cash flow is a basic component
of the financial statements summarizing the
operating, investing and financing activities of
an enterprise.
 In simple language, the statement of cash flow
provides information about the cash receipts
and cash payments of an enterprise during a
period.
CLASSIFICATION OF CASH FLOWS
 Cash flows are inflows of cash and cash
equivalents. The statement of cash flow should
report cash flows during the period classified as
follows:
o Operating activities
 are the cash derived primarily
from the principal revenue
producing activities of the
enterprise.
 generally result from transactions
and other events that enter into
the determination of net income
or loss.
Examples of Cash flows from Operating Activities are:
 Cash receipts from sale of goods and
rendering of services
 Cash receipts from royalties, rental,
fees, commissions and other revenue,
 Cash payments to suppliers for goods
and services
 Cash payments for selling,
administrative and other expenses
 Cash receipts and payments for
securities held for dealing or trading
purposes (Investment in Trading
Securities)
 are the cash flows derived from
the acquisition and disposal of
long-term assets and other
investments not included in cash
equivalent.
 include cash flows from
transactions involving non-
operating assets.
Examples of Cash Flows from Investing Activities are:
 Cash payments to acquire property, plant and
equipment, intangibles and other long-term
assets.
 Cash receipts from sales of property, plant and
equipment, intangibles and other long-term
assets.
 Cash payments to acquire equity or debt
instruments of other enterprises.
 Cash receipts from sales of equity or debt
instruments.
o Financing activities
 are the cash flows derived from
the equity capital (investment of
owner) and borrowings of the
business.
 are the cash flows that result
from transactions between the
enterprise and its owners (equity
financing) and between the
enterprise and its creditors (debt
financing).
 include the cash flows from
transactions involving “nontrade
liabilities” and “equity” of an
enterprise.
Examples of Cash Flows from Financing Activities
 Cash receipts from contributions by owners.
 Cash withdrawals by owners.
 Cash receipts from issuing notes, bonds,
mortgages and other short or long term
borrowings
 Cash payments for amounts borrowed.
 Note: interest payments are included in
the operating activities

Statement of Cash Flows Format

Exercise
Transactions O, I, F or NA
1. Payment of taxes
2. Cash Proceeds from borrowings
3. Cash paid upon purchase of equipment
4. Cash received upon sale of long term investment
5. Additional cash investment of the owner
6. Owner's withdrawal of supplies for personal use
7. Payment of salaries
8. Cash deposit from customers for services to be
completed/delivered
9. Collection from customers
10. Payment of liabilities
11. Repayment of matured loan to the bank
Principal(F); interest (O)
12. Payment to suppliers for services rendered
13. Cash received from sale of equipment
14. Additional Investment of the owner in the
form of equipment