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Understanding “Cash Flow Statement”

Lets start with the basic concept ;

Why Is Cash So Important?"

Cash is the necessary element which runs the business. We need to know where the cash comes from (sources, or inflows) and where it is spent (uses or outflows).

What is Cash Flow?

Cash Flow & Accrual method of accounting

Cash Flows, although related to net income, are not same. This is because of the accrual method [1] of accounting. As we know,under accrual accounting, a transaction is recognized on the income statement when the earnings process is completed, that is , when the goods and /or services have been delivered or performed or an expense has been incurred.

..that mean ...Cash Flow Statement

An Example of the Difference Between Budgets and Cash Flows

If you take a “Prepaid insurance” for a year costing $3,000 – or $250 a month

  1. A budget will account for 12 equal installments of $250
  2. A cash flow statement will recognize a 1-time only outflow of $3,000.
  3. You can also see more details inflows and Outflows attributes at the end.

Why do we need CFS as financial reporting?

Do you know ..What is Float?

Float refers to the difference in time between when the check is deposited and cash is received.

This makes a significant impact of your CFS.

Statements of Cash Flow

A statement of cash flow is one of several financial statements that public companies construct and share with their stake holders. In general this statement will include a formula or calculation that considers:

Cash and Cash Equivalents (Beginning)
+ Cash from Operations
- Cash Flows from Investing Activities
+ Cash Flows from Financing Activities
= Cash and Cash Equivalents (Ending)

Its all about Relation ship

This is family pack of financial reporting. The relationship among the balance sheet, income statement, and statement of cash flows:


CASH FLOW CLASSIFICATIONS- Activities Affecting Cash

Cash Activities are divided into three main categories

Operating Activities

Cash Inflows are typically Understood as

where the cash outflow can be best understood as:

Investing Activities

Cash Inflows are typically Understood as

where the cash outflow can be best understood as:

Financing Activities

Cash Inflows are typically Understood as

where the cash outflow can be best understood as:

How To Develop an Accurate Initial Cash Flow Projection

Developing a Cash Flow Statement

Do you know Who can utilize information processed by the SCF?

These is utilized by Management,Investors

Cash Flow Statement in Oracle Financials?

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6 Comments (Open | Close)

6 Comments To "Understanding “Cash Flow Statement”"

#1 Comment By Tim Ramsey On March 21, 2008 @ 2:05 am

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Tim Ramsey

#2 Comment By Aaron Wakling On March 21, 2008 @ 2:15 am

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Aaron Wakling

#3 Comment By Dogn Liang On April 6, 2008 @ 11:48 pm

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#4 Comment By Eden On April 23, 2008 @ 8:13 pm

very informative. keep it up!!

#5 Comment By Cheryl G. Rodriguez On June 16, 2008 @ 12:01 pm

Very simple language, informative. Thank you for sharing with us.

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