Cash Flow Statement - BC Bookkeeping Tutorials|dwmbeancounter.com

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Cash Flow Statement

Financial Statements

Cash

The last financial statement, the Cash Flow Statement is prepared to report all the changes in cash that occurred over a period of time usually a month or year.
The major sections of the statement are the heading, a section for reporting the increases in cash (resources provided by), a section for reporting the decreases in cash (resources applied to), and a summary of the change in cash (increase/decrease) for the period.

If the business was in operation in the previous year, the prior year balance sheet along with the current year balance sheet and current year income statement is needed in order to prepare the statement. Additional analysis of some of the accounts may also be needed.

Our example assumes that ABC Mowing’s prior year balance sheet is as follows:
ABC Mowing
Balance Sheet
As Of December 31,xxxx Prior Year



Assets

Cash$6,400
Accounts Receivable600
Mowing Equipment2,500
 Total Assets $9,500



Liabilities

Accounts Payable$2,000
 Total Liabilities $2,000



Owner's Equity

ABC Capital
$7,500



Total Liabilities & Equity $,9500



Using the above prior year balance sheet along with the current year balance sheet and income statement we prepared the following Statement Of Changes in Cash:
Summary of how to prepare the statement:

The first step is determining the cash provided or used by operations and begins with the operating income for the period.

Adjustments are made to the income for revenue or expenses items that did not provide or use cash.

Additional adjustments are made for all current and noncurrent accounts and are recorded as addition or subtractions depending upon their effect on cash based on their beginning of the year and end of the year balances.
ABC Mowing
Cash Flow Statement
For the Period Ending December 31,xxxx
Sources Of Cash
Financing from bank loan$10,000







 Total Sources $10,000





Uses Of Cash
Income from Operations820


Add:



Increase in Accounts Payable60880

Deduct:



Increase in Supplies Inventory100


Increase in Accounts Receivable1,0001,100

Cash Used by Operations

220
Payment of Owner's Draws

1,100
Purchase of Equipment

10,000


 Total Uses 11,320

Decrease in Cash $1,320

Change in Cash Balances
Cash Balances December 31,xxxx (Current Year) $5,080
Cash Balances December 31,xxxx (Prior Year) 6,400
Decrease In Cash $1,320


Additional facts and information about the business
is disclosed in the Notes to the Financial Statements
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