Operating Activities

Cash Inflows from operating activities

cash receipts from sale of goods and the rendering of services.
cash receipts from royalties, fees, commissions and other revenues.
Cash Outflows from operating activities
Cash payments to suppliers for goods and services.
Cash payments to and on behalf of the employees.
Cash payments to an insurance enterprise for premiums and claims, annuit
ies, and other policy benefits.
Cash payments or refunds of income taxes unless they can be specifically
identified with financing and investing activities.
Investing Activities
Cash Inflows from Investing Activities
Cash receipt from disposal of fixed assets including intangibles.
Cash receipt from the repayment of advances or loans made to third parti
es ( except in case of financial enterprise).
Cash receipt from disposal of shares, warrants or debt instruments of ot
her enterprises other than receipts from those instruments considered to be cash
or cash equivalents or held for trading purposes.
Interest received in cash from loans and advances.
Dividend received from investments in other enterprises.
Cash Outflows from investing activities
Cash payments to acquire fixed assets including intangibles and capitali
sed research and development.
Cash payments to acquire shares warrants or debt instruments of other en
terprises other than the instruments considered to be cash equivalents or held f
or trading purposes.
Cash advances and loans made to third party (other than advances and loa
ns made by a financial enterprise wherein it is operating activities).
Financing Activities
Cash Inflows from financing activities
Cash proceeds from issuing shares or other similar instruments.
Cash proceeds from issuing debentures, loans, bonds and other short or l
ong-term borrowings.
Cash Outflows from financing activities
Cash repayments of amounts borrowed.
Interest paid on loans, debentures and advances.
Dividends paid on equity and preference capital.
Direct Method
Cash Collections Receipts from Sales = Sales + Decrease (or - increase) in Accou
nts Receivable
Cash payments for purchases = cost of goods sold + increase (or - decrease) in i
nventory + decrease (or - increase) in accounts payable
Cash payments for operating expenses = operating expenses + increase (or - decre
ase) in prepaid expenses + decrease (or - increase) in accrued liabilities
Cash interest = interest expense - increase (or + decrease) interest payable + a
mortization of bond premium (or - discount)
Cash payments for income taxes = income taxes + decrease (or - increase) in inco

me taxes payable
Formulas
Cash Receipts from Customers =
+
Net Sales
+
Beginning Accounts Receivable
Ending Accounts Receivable
Cash Payments to Suppliers =
+
Purchases
+
Ending Inventory
Beginning Inventory
+
Beginning Accounts Payable
Ending Accounts Payable
Cash Payments to Employees =
+
Beginning Salaries Payable
Ending Salaries Payable
+
Salaries Expense
Cash Payments for Purchase of Prepaid Assets =
+
Ending Prepaid Rent, Prepaid Insurance etc.
+
Expired Rent, Expired Insurance etc.
Beginning Prepaid Rent, Prepaid Insurance etc.
Interest Payments =
+
Beginning Interest Payable
Ending Interest Payable
+
Interest Expense
Income Tax Payments =
+
Beginning Income Tax Payable
Ending Income Tax Payable
+
Income Tax Expense
Operating Activities (Direct Method)
1.
Cash Received from Customers
a. Start with: Sales (Income Statement)
b. And: Add Decreases in Accounts Receivable or Subtract Incre
ases in Accounts Receivable
2.
Cash Payments for Merchandise
a. Start with: Cost of Goods Sold (Income Statement)
b. And: Add Increases in Merch. Inventory or Subtract Decreases
in Merch. Inventory
c. And: Add Decreases in Accounts Payable or Subtract Increases
in Accounts Payable
3 Cash Payment for Wages and Other Operating Expenses
a. Start with: Wages and Other Operating Expenses (Income Statem
ent)
b. And: Add Increases in Prepaid/Other Expenses or Subtract Decr
eases in Prepaid/Other Expenses
4 Cash Payment for Income Taxes
a. Start with: Income Taxes Expense (Income Statement)
b. And: Add Decreases in Taxes Payable or Subtract Increases in
Taxes Payable
Investing Activities

1.
2.

Cash Received from Sale of an Asset

a. (Cost
Accum. Deprec. ) + Gain on Sale or
Cash Payment to Purchase an Asset
a. Begin. Bal. Decreases in Account (Sale)

Loss on Sale
Ending Bal. = Purch

ase Payment
b. Alternative: Cost of Asset Sold - Decrease in Asset Account
= Purchase Payment
Financing Activities
1.
Cash Received from Issuance of Stock
a. Number of shares Sold multiplied by the Issue Price of each s
hare
2.
Cash Payment to Retire Bonds
a. Decrease on Bonds Payable + Loss on Retirement or
Gain on Ret
irement
3.
Cash Payment of Dividends
a. Begin. R/E + Net Income Ending R/E + Decrease in Div. Pay. Or
Increase on Div. Pay.