We will look after the Format of the Cash Flow Statement.
Meaning
Cash Flow Statement is the statement that shows the data regarding cash inflows and outflows of the company through operating, investing, and financing activities.
a. Operating activities: It shows the cash flows through operational activities. Eg, Interest Paid, tax paid, net sales, etc.
b. Investing activities: It shows the cash flows in company through investing activities. Eg. Purchase of fixed assets, sell of the fixed assets, sale of investment, etc.
c. Financing activities: It shows the activities in which cash is brought in company to run company and take cash as dividend. Eg. issue of equity and debenture, dividend, loans, etc.
Format of the Cash Flow Statement
There are two types of Format of the Cash Flow Statement.
1. Direct Method
Following is the cash flow statement from direct method
| Particulars | Amount | Amount |
| A. Cash Flow from Operating Activities | ||
| i. Cash sales and collection from customers. | ||
| Net Sales ( Cash sales – sales return ) | XXX | |
| Decrease in sundry debtors/ Account receivable | XXX | |
| Decrease in bills receivable | XXX | |
| Bad debt recovered | XXX | |
| Increase in sundry debtors/ accounts receivable | (XXX) | |
| Increase in bills receivable | (XXX) | |
| Bad debt written off | (XXX) | |
| Discount allowed | (XXX) | XXX / (XXX) |
| ii. Cash paid to suppliers for purchase of merchandise. | ||
| Cost of goods sold ( Op inventory + Purchase – CL. inventory ) | (XXX) | |
| Decrease in sundry creditors/ Account payable | (XXX) | |
| Decrease in bills payable | (XXX) | |
| Increase in inventory / stock | (XXX) | |
| Decrease in inventory / stock | XXX | |
| Increase in sundry creditors/ account payable | XXX | |
| Increase in bills payable | XXX | |
| Discount receive | XXX | XXX / (XXX) |
| iii. Cash paid to employees and for other expenses | ||
| Cash operating expense including wages | (XXX) | |
| Increase in outstanding expense | XXX | |
| Decrease in prepaid expense/ Accrued income | XXX | |
| Increase in prepaid expense / Accrued income | (XXX) | |
| Decrease in outstanding expense | (XXX) | XXX / (XXX) |
| iv. Interest Paid | ||
| Interest expense on loan, debenture | (XXX) | |
| Decrease in outstanding interest | (XXX) | |
| Increase in Outstanding Interest | XXX | |
| v. Tax paid | ||
| Tax expense | (XXX) | |
| Increase in prepaid tax | (XXX) | |
| Decrease in outstanding tax | (XXX) | |
| Increase in outstanding tax | XXX | |
| Decrease in prepaid tax | XXX | XXX/ (XXX) |
| Add: Interest & dividend received | ||
| Interest/ dividend received | XXX | |
| Decrease in interest / dividend receivable | XXX | |
| increase in interest/ dividend receivable | (XXX) | XXX/ (XXX) |
| Net Cash flow from Operating Activities | +-XXX | |
| B. Cash Flow from Investing Activities | ||
| Purchase of assets / Investment / Goodwill | (XXX) | |
| Sale of assets / Investment | XXX | |
| Net Cash Flow from Investing Activities | +-XXX | |
| C. Cash Flow from the Financing Activities | ||
| Issue of equity shares & preference share with premium or discount | XXX | |
| Issue of debenture with premium or discount | XXX | |
| Increase in loan/ bank loan/ overdraft | XXX | |
| Redemption of debenture or preference share | (XXX) | |
| Payment of final and interim dividend | (XXX) | |
| Net cash flow from financing activities | +-XXX | |
| Add: Beginning cash & cash equivalents | XXX | |
| Ending Cash and cash equivalent |
2. Indirect Method
Following is the cash flow statement from indirect methods
| Particulars | Amount | Amount |
|---|---|---|
| Net Income after tax and dividend | XXX | |
| Add: Non-operating/ non cash expense and losses | ||
| Depreciation | XXX | |
| Premium on redemption of debenture | XXX | |
| Provision for taxation and dividend in profit & loss A/C | XXX | |
| Intangible/ fictitious assets written off | XXX | |
| Loss on sales of fixed assets | XXX | |
| Other non-operating/ non-cash expense and losses | XXX | XXX |
| Less: Non-operating gains and incomes: | ||
| Appreciation of fixed assets | XXX | |
| Dividend/interest received | XXX | |
| Gain on sale of fixed assets | XXX | |
| other non operating gains and income | XXX | |
| discount on redemption of debenture | XXX | XXX |
| Funds from operation or operating activities | ||
| Add: Decrease in current assets ( except cash or cash equivalent ) | XXX | |
| Increase in current liabilities (except provision for tax & dividend ) | XXX | XXX |
| Less: Increase in current assets ( except cash or cash equivalent ) | XXX | |
| Decrease in current assets (except provision for tax & dividend ) | XXX | XXX |
| Less: Tax paid | XXX | |
| A. Net Cash Flow from investing activities | +-XXX | |
| Purchase of fixed assets / Investment / Good will | (XXX) | |
| Sale of fixed assets / Investment | XXX | |
| B. Net Cash Flow from investing activities | +-XXX | |
| Issue of equity share & preference share with premium or discount | XXX | |
| Issue of debenture with premium or discount | XXX | |
| Increase in loan/ bank loan/ overdraft | XXX | |
| Redemption of debenture or preference share | XXX | |
| Payment of final & interim dividends | XXX | |
| C. Net cash flow from financing activities | +-XXX | |
| Net Changes in cash and cash equivalent | +-XXX | |
| Add: Beginning cash and cash equivalents | XXX | |
| Ending cash and cash equivalents | XXX |
Hence, these are the two methods to show cash flow statement.
