Fundamentals of ABM 2 - Cash Flow Statement

Componens of Cash Flow Statement

1. COMPONENTS AND STRUCTURES OF CASH FLOW STATEMENT ( CFS )

2. OJBECTIVES Define and explain Cash Flow Statement (CFS); Identify the components and structures of the CFS; Recognize and explain the two approaches for preparing the CFS; Reflect on the necessity of preparing the CFS; and Prepare the CFS.

3. The Cash Flows Statement (CFS) The statement of cash flows is a formal statement that provides information about the cash receipts (inflows) and cash payments (outflows) of an entity from operating, investing, and financing activities during the period.

4. The Three Major parts of CFS 1. Operating Activities are generally the cash effects of transactions and other events that enter into the determination of profit or loss. It usually involves day – to – day transaction, providing service and delivering goods.

5. 2. Investing Activities include making and collecting loans, activities like acquiring and disposing investments in debt or equity securities and obtaining and selling of property and equipment.

6. 3. Financing Activities are the net amount of funding a company generates in a given period of time to finance its business usually include obtaining resources from owners and creditors. Hence, cash activities under this section are deal with debt and equity.