Cashflow statement

Reference items: exhibit 12-11, 12-3 and exhibit 12-15, exhibit 12-8

Exhibit 12-2

Operating cash flows Current assets Current liabilities Operating cash flows

Investing cash flowsLong term assets Long term liabilities

Owner’s equity Financing cash flow

Classification of cash flow items

Operating Investing FinancingInterest receivedDividends receivedInterest paidDividends paid

Preparing by direct method

Follow template: Exhibit 12-11

COMPUTING CASH FLOW AMOUNTS (for operating activities only, investing and financing under indirect)

Follow template: Exhibit 12-15

1. Just refer to Exhibit 12-15

Cash receipts

Accounts receivable Interest (or dividend) receivableBeginning balance Collections Beginning balance Interest receivedSales (Write offs) Interest revenueEnding balance Ending balance

Add to table: MINUS WRITE OFF FROM COLLECTIONS (if amount available)

Cash payments

For inventory

Inventory Accounts payableBeginning balance COGS Cash payments Beginning balancePurchases PurchasesEnding balance Ending balance

Other expenses

Prepaid expenses Accrued liabilitiesBeginning balance Expiration of

prepaid expenseCash payments Beginning balance

Cash payments Accrued expensesEnding balance Ending balance

Operating expenses (exclude wages and non cash expenses e.g. depreciation and bad debt)

Expiration of prepaids MINUS NONAccrued expenses CASH EXPENSESOther cash payments IF INCLUDED INEnding Balance OPERATING

EXPENSE

Payments for wages/interest and income tax

Wages payable Interest and income tax payableCash paid Beginning balance Cash paid Beginning balance

Wages Interest or income tax

Ending balance Ending balance

For operating activities

Do not include non-cash expenses such as depreciation, amortization, non-cash gains/loss

For investing activities

Record dollar amount of sale of fixed asset, not gains or loss on sale Non-cash activities not recorded – but reported in separate schedule or notes (Exhibit 12-14)

For financing activities

Share dividend has no effect on cash Non-cash activities not recorded – but reported in separate schedule or notes (Exhibit 12-14)

Preparing by indirect method

Follow template: Exhibit 12-3

Operating activities

1. Refer to template Exhibit 12-32. Addendum: Other noncash items include writedowns/writeoffs/impairment loss/bad debt

expense3. For analyzing current assets and liabilities do not analyze dividend receivable/payable, interest

receivable/payable and income tax payable4. Beware of share of profit due to equity method investments5. Refer to Exhibit 12-15 for calculating interest paid and received, dividends received and income

tax paid

Calculating interest receivable and payable

Interest receivable Interest payableBeginning balance Interest received Interest paid Beginning balanceInterest revenue Interest expenseEnding balance Ending balance

Same for dividends receivable and income tax payable

Investing activities

1. Just refer to Exhibit 12-8

Computing acquisitions and sale of fixed assets

Fixed assets, netBeginning balance Depreciation for

the yearAcquisitions NBV of sold assetEnding balance

Fixed assets, net + Acquisitions – Depreciation – Book value of asset sold = New fixed asset, netFixed assets + Acquisitions – Original cost of sold asset = New fixed assetsAccumulated depreciation + Depreciation for the year – Depreciation on sold asset = Ending balance

For investments and loans (receivable)

Investments Loans receivableBeginning balance Investments sold Beginning balance

Investments purchased

Loans made Repayment of loans

Ending balance Ending balance

To add gains or subtract losses on sale of fixed assets and investments

Financing activities

1. Just refer to Exhibit 12-9 adapted

Non-cash investing and financing activities

Separately disclose such items For issuance of shares for fixed assets, acquisition of fixed assets should be reduced and cash

from issuance of shares should be reduced For acquiring fixed assets with note payable, acquisition of fixed assets should be reduced and

cash from note payable should be reduced Share dividends included in exhibit 12-9 adapted. Asset revaluation – acquisition of fixed assets should be reduced