Statement of Cash Flows

Definition:

• Revenues are not necessarily equal to collections from customers and expenses are not necessarily the same as payments to suppliers.
  • As a result, net income normally does not equal the net cash generated by operations in the same period.
• Reports inflows and outflows of cash during the accounting period in the categories of
  • Operating
  • Investing
  • Financing
• Heading:
  1. Name of the entity
  2. Title of the statement, Balance Sheet.
  3. Accounting Period
  4. Unit of measure (in millions of dollars).
• 

$\pm$ CFO $\pm$ CFI $\pm$ CFF = Change in cash:

• Cash Flow Statement Equation
• Change + Beginning Cash = Ending Cash Balance

Cash flows from operating activities (CFO):

• Directly related to earning income

Cash flows from investing activities (CFI):

• Cash flows from purchase/sale of plant, equipment, & investments

Cash flows from financing activitie (CFF):

• Cash flows from investors and creditors

Cash expenditure:

• 
• Not all cash expenditures are for for expenses