CASH-FLOWS_EXE.24-25.pptx FABM grade 11 Q2

FABM

1. STATEMENT OF CASH FLOWS At the end of the lesson, you should be able to: 1. Differentiate operating, investing and financing activities 2. Prepare a statement of cash flows under direc t and indirect method 3. Solve accounting problems related to cash flows

2. REVIEW  Different forms of business ORGANIZATIONS  Statement of Changes in Equity for a sole proprietorship  Solve accounting problems on the capital statement

3. FINANCIAL STATEMENTS Are structured representation of the financial position and financial performance of an entity. The objective of the financial statements is to provide information about the financial position , financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

4. CASH FLOW ACTIVITIES 1 . OPERATING 2. INVESTING 3. FINANCING

5. CASH FLOWS OPERATING ACTIVITIES Activities of an equity related to their main revenue generating activities of providing goods and services Where to see in the FS usually? Income statement Balance sheet current assets Balance sheet current liabilities

6. INVESTING ACTIVITIES Activities of an entity related to sale and purchase of long-term assets and other investments Where to see in the FS usually ? Balance sheet noncurrent assets

7. FINANCING ACTIVITIES Activities of an entity related to acquisition of funding for the use of the entity Where to see in the FS usually ? Balance sheet noncurrent liabilities and equity

8. OPERATING ACTIVITIES (Current Assets and Current Liabilities) CASH INFLOWS CASH OUTFLOWS Cash received from sales and service revenue Payment to suppliers Collection of accounts receivable Payment of operating expenses like salaries, rent, utilities and taxes Refunds from suppliers Payment of interest expense Charity contributions Cash refund to customers

9. INVESTING ACTIVITIES (Non Current Assets) INFLOWS CASH FLOWS Cash proceeds from selling productive assets like property, plant and equipment Payment for the purchase of productive assets like property, plant and equipment Cash proceeds from selling investments in equity securities of other companies Payments to acquire investments in equity securities

10. FINANCING ACTIVITIES (Non current liabilities and Equity) INFLOWS OUTFLOWS Cash investment by the owner Cash withdrawal by the owner Cash proceeds from issuance of share capital Payments of cash dividends to owners Cash proceeds from long term borrowing Payments of long term borrowing

11. GROUP ACTIVITY

12. INFLOWS/OUTFLOWS ACTIVITY PAYMENT OF INTEREST P 82,000 PROCEEDS FROM SALE OF LAND 79,000 CASH WITHDRAWAL 121,000 DEPRECIATION EXPENSE 24,000 COLLECTIONS FROM CUSTOMERS 983,000 PAYMENTS OF INCOME TAXES 154,000 ADDITIONAL CASH INVESTMENTS 189,000 PAYMENTS TO SUPPLIERS 675,000 INCREASE IN INVENTORIES 46,000 The following are the various cash flows and other information of 11 ABM Co. for the year ended 2020 Additional information: The company’s statement financial position reported the cash balance of P 500,000 as of January 1, 2020 and P 719,000 as of December 31, 2020

13. INFLOWS/OUTFLOWS ACTIVITY PAYMENT OF INTEREST P 82,000 OUTFLOWS OPERATING PROCEEDS FROM SALE OF LAND 79,000 INFLOWS INVESTING CASH WITHDRAWAL 121,000 OUTFLOWS FINANCING DEPRECIATION EXPENSE 24,000 NON CASH NON CASH COLLECTIONS FROM CUSTOMERS 983,000 INFLOWS OPERATING PAYMENTS OF INCOME TAXES 154,000 OUTFLOWS OPERATING ADDITIONAL CASH INVESTMENTS 189,000 INFLOWS FINANCING PAYMENTS TO SUPPLIERS 675,000 INCREASE IN INVENTORIES 46,000 OUTFLOWS NON CASH OPERATING NON CASH The following are the various cash flows and other information of 11 ABM Co. for the year ended 2020

14. CASH FLOWS FROM OPERATING ACTIVITIES Collections from customers P 983,000 Payments to suppliers ( 675,000) Payments of income taxes Payments of interest (154,000) ( 82,000) Net cash provided by(used) in operating activities P 72,000 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale of land 79,000 Net cash provided by(used) in investing activities 79,000 CASH FLOWS FROM FINANCING ACTIVITIES Additional investments 189,000 Cash withdrawal (121,000) Net cash provided by(used) in financing activities 68,000 NET INCREASE/DECREASE IN CASH P 219,000 CASH BALANCE at the beginning of the period CASH BALANCE at the end of the period 500,000 P 719,000 11 ABM CO. Statement of Cash Flows Dec. 31, 2020