4.04 Statement of Cash Flows Apply procedures for preparing corporate financial statements.

Statement of Cash Flows Heading Section Write the name of the company. Write the name of the statement. Write the date.

Statement of Cash Flows B. Cash Flows from Operating Activities Operating Activities Cash Inflows (sources of cash) Cash Sales of Merchandise Cash Sales of Services Interest Income Dividends Received Cash Received from Charge Customers   Cash Outflows (uses of cash) Advertising Credit Card Fees Insurance Expense Interest Payments Payroll Expenses Property Taxes Utility Expenses Income Tax

Statement of Cash Flows B. Steps in Reporting Cash Flows from Operating Activities Enter the net income as shown on the comparative income statement. Add the amount of depreciation expense to net income. Analyze the changes in current assets. Analyze the changes in current liabilities. Determine the cash provided by operating activities (cash increases) or the cash used by operating activities (cash decreases).

Statement of Cash Flows C. Cash Flows from Investing Activities Investing Activities Cash Inflows (sources of cash) Sale of Property Sale of Equipment Sale of Building Collections of Long-term Loans   Cash Outflows (uses of cash) Purchase of Land Purchase of Equipment Purchase of Building Purchase of Patents or Special Licenses Loans to Other Companies Purchase of Stock in Other Companies Purchase of Bonds in Other Companies

Statement of Cash Flows C. Steps in Reporting Cash Flows from Investing Activities Analyze changes in long-term assets. (plant assets) Determine the cash provided by investing activities (if cash increases) or the cash used by investing activities (if cash decreases).

Statement of Cash Flows D. Cash Flows from Financing Activities Financing Activities Cash Inflows (sources of cash) Capital Stock Issue Mortgage Issue Bond Issue Long-Term Loans   Cash Outflows (uses of cash) Purchase of Treasury Stock Payment of Cash Dividends Repayment of Loan/Note Principal Retirement of Bond Principal

Statement of Cash Flows D. Steps in Reporting Cash Flows from Financing Activities Analyze changes in long-term liabilities. Analyze changes in cash identified on the statement of stockholders’ equity. Determine the cash provided by financing activities (if cash increases) or the cash used by investing activities (if cash decreases).

Statement of Cash Flows D. Steps in Completing the Statement of Cash Flows Compute the net increase or decrease in Cash resulting from operating, investing, and financing activities. Identify the beginning cash balance from the comparative balance sheet. The beginning cash balance for the current year is the ending cash balance from the prior year. Compute the ending cash balance. Verify that the Cash Balance, End of Period matches the cash balance shown on the comparative balance sheet.