Statement of Cash Flows
Definition: Cash inflows and outflows
Scope:Very BroadDifficulty:Easy
Cash inflows and outflows
Sample Statement of Cash FlowsComparative
| Fictitious Conglomeration Corporation | |
|---|---|
| Statement of Cash Flows (Indirect Method) | |
| For the Year Ended December 31, 2025 | |
| Cash Flows from Operating Activities | |
| Net Income | $124,840 |
| Adjustments for Non-Cash Items: | |
| Depreciation | $68,000 |
| Amortization of Intangible Assets | 8,000 |
| Deferred Income Tax | 4,200 |
| Changes in Operating Assets & Liabilities: | |
| (Increase) in Accounts Receivable | (19,280) |
| (Increase) in Inventory | (12,300) |
| Decrease in Prepaid Expenses | 3,600 |
| Increase in Accounts Payable | 10,200 |
| Increase in Accrued Expenses | 6,540 |
| Increase in Unearned Revenue | 3,200 |
| Net Cash from Operating Activities | $197,000 |
| Cash Flows from Investing Activities | |
| Purchase of Property, Plant & Equipment | ($125,000) |
| Purchase of Short-Term Investments | (15,000) |
| Net Cash from Investing Activities | ($140,000) |
| Cash Flows from Financing Activities | |
| Proceeds from Long-Term Borrowings | $50,000 |
| Repayment of Long-Term Debt | (25,000) |
| Member Distributions | (50,000) |
| Net Cash from Financing Activities | ($25,000) |
| Net Increase in Cash | $32,000 |
| Cash at Beginning of Year | 92,500 |
| Cash at End of Year | $124,500 |
Operating + Investing + Financing = $197,000 + ($140,000) + ($25,000) = $32,000 net increase
Indirect Method: Starts with net income and adjusts for non-cash items (depreciation, amortization) and changes in working capital to arrive at cash from operations. This is the most common method because it reconciles accrual-basis income to cash flow. Both methods produce the same Net Cash from Operating Activities; only the presentation of the operating section differs. Investing and financing activities are identical under both methods.
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External Links
- Cash flow statement — Wikipedia