Main purpose and element of the Statement of Cash Flow

Sophie Ann Jones
Mind Map by Sophie Ann Jones, updated more than 1 year ago
Sophie Ann Jones
Created by Sophie Ann Jones almost 5 years ago
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To Identify the main purpose and elements of the Statement of Cash Flow
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Main purpose and element of the Statement of Cash Flow
1 DIRECT METHOD
1.1 Cash Received from customers
1.2 Cash Paid to suppliers
1.3 Cash paid to employees
1.4 Cash paid for operation expenses
1.5 Interest Paid
1.6 Taxes Paid
1.7 Dividends Paid
1.8 Net cash from operating activities
2 INDIRECT METHODS
2.1 The net cash flow from operating activities is determined by adjusting profit or loss for the effects of:
2.1.1 Changes during the period in inventories and operating receivables and payables
2.1.1.1 Non-Cash items such as depreciation, provisions, deferred taxes, unrealised foreign currency gains and losses, and undistributed profits of associates
2.1.1.1.1 All other items for which the cash effects are investing or financing cash flows.
3 To provide information about a company's gross receipts and gross payments for a specified period of time.
3.1 The gross receipts and gross payments will be reported in the cash flow statement according to one of the following classifications: operating activities, investing activities, and financing activities
3.1.1 Operating: The sources and uses of cash in the operating section come from revenue, expenses, gains, losses, and other costs.
3.1.2 Investing: This section shows sources and uses of cash from debt and equity purchases and sales; purchases of property, plant, and equipment; and collection of principal on debt.
3.1.3 Financing: You report activities such as long-term liability (paying or securing loans beyond a period of 12 months from the balance sheet date) and equity items (sale of company stock and payment of dividends) in the financing section.
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