Statement of cash flow

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Statement of cash flow . By Praew 11Yo. Statement of Cash Flow. Statement of Cash Flow. Business need to ensure: Sufficient profits are made to finance the business activities Sufficient cash funds are available when needed. Statement of Cash Flow. Business activity. - PowerPoint PPT Presentation

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<p>Statement of Cash Flow</p> <p>Statement of cash flow By Praew 11YoStatement of Cash Flow</p> <p>Business need to ensure:</p> <p>Sufficient profits are made to finance the business activities</p> <p>Sufficient cash funds are available when neededStatement of Cash FlowStatement of Cash Flow</p> <p>Business activity1. operating Activity (sales) revenueExpenseCurrent assetCurrent liabilityProfit &amp; loss </p> <p>2. Investing Activity (Spend)Non-current asset3. Financing activity (earn)Non-current liabilityCommon Stock - Dividend DrawingsInternational Accounting Standard 7 IAS 7</p> <p>Companies are required to include a statement of cash flows with their published financial statements</p> <p>Statement of Cash FlowCash In flow &amp; Cash out-flow Cash in flow Cash out flowProfits IncreaseLosses increaseNon-current assets decreaseNon-current assets increaseInventory decreaseInventory increaseAccount receivable decreaseAccount receivable increaseCapital increaseCapital decreaseLoans increaseLoans decreaseAccount Payable increaseAccount payable decreaseRevenue increaseExpense increaseDrawings/ Dividends increase</p> <p>Statement of Cash FlowProfit &amp; Liquidity</p> <p>Even though companies make profits. They could face a shortage of cash</p> <p>Example:A sole trader is making $40,000 profits for the year, but his drawings have been over $60,000</p> <p>A partnership whose products will not be on the market for quite a long time has invested in some very expensive machinery. A lot of money has been spent, but theres no income.Statement of Cash FlowItems not involved in a movement of cash:DepreciationAllowance for doubtful debtsBook profits and losses on saleDisposal of non-current assetsStatement of Cash Flow1. Depreciation</p> <p>Statement of Cash Flow2. Allowance for doubtful debts</p> <p>+ to net profit any increase in the allowance for doubtful debts- from net profit any decrease in the allowance for doubtful account</p> <p>Statement of Cash Flow3. Book profits and losses on sale</p> <p>Statement of Cash Flow4. Disposal of non-current assetsStatement of Cash Flow</p> <p>Net Profit:</p> <p>After adjustments for depreciation</p> <p>After adjustments to allowances for doubtful debts</p> <p>After adjustments book profits/losses on sales of non-current assetsStatement of Cash FlowStatement of Cash FlowReconciliation of net profit to net cash flowNet profit+Adjustment for items not involving the movement of cash:Depreciation for the year+Increase: Allowance for doubtful debts+Decrease: Allowance for doubtful debts</p> <p>-Book loss on sales of non- current assets+Book profit on sales of non- current assets</p> <p>-</p> <p>31.12.201231.21.2013TypesActivitiesChangeInflow/ OutflowPremises at cost</p> <p>25,00028,800NC assetsInvest3,800 + 0UTFLOWInventory</p> <p>12,50012,850C assetsOperate350 +OUTFLOWA/R21,65023,140C assetsOperate1,490 +OUTFLOWCash/Bank 4,300 5,620C assetsOperate1,320 +A/P11,35011,120C liabilityOperate230 +OutflowNet profit25,440OperateDrawings18,250Finance</p> <p>Reconciliation of net profit to net cash flowBusiness ABusiness B Business CNet profit16,27021,39032,410Adjustment for items not involved in the movement of cash.Depreciation for the year2,6904,1206,640Increase allowance of doubtful debts540360Decrease allowance for doubtful debts(200)Book losses on sales of non current asset1,200490Book Profit(750)20,70025,120 39,340THANK YOU VERY MUCH ! !</p>