Sample of Cash flow statement

 

The cash flow statement has has four parts i.e. operating activities, investing activities, financing activities and movement in cash & cash equivalents.

Operating activities

1. Cash generated from operations: The cash generated form operations is the net profit after adding back non expenses not involving cash such as depreciation or deducting incomes not involving cash.
2. Interest received: This is interest received for investments e.g. interest received from bank for cash held.
3. Interest paid: Can be such as overdraft interest, hire purchase interest etc
4. Income tax paid: This is tax paid by the firm for the profit earned. Take for example a company made a net profit of one million dollars and is subject to a 30% tax, then the income tax will be three hundred thousand only.

Investing activities

1. Purchase of property, plant and equipment: These are land, buildings, plant machinery, motor vehicles, electronic data processing devices, equipments and furniture purchased for company's use.
2. Prepayment of operating lease rentals- most companies who use offices they don't own pay rent each month for use of such properties. You find that some arrangements between the tenant and landlord is to pay rent in quarterly or half yearly or year. The aspect of prepayment arises when a company pays rent for the period it has not utilized yet. Take for example our financial year ends 31st December and i have paid rent for the first quarter ( January, February and March) of the following year on 20th December of the current year, then the rent paid is what we call a prepayment of operating lease rentals. Other prepayments include insurance, medical schemes etc. 
3. Proceeds from disposal of property, plant and equipment or other fixed assets. This is the cash received for sale of a fixed asset. You realize when arriving at cash generated from operations the profit or loss of assets is actually excluded.  The reason of being exclude is that it is in investing activities category.

Financing activities

1. Proceeds from issue of of ordinary shares: When a company floats shares to stock exchange the cash received from such sale of shares is treated as a financing activity. Shares can also be sold to individuals without floating to the market- this is mostly for private companies.
2. Dividends paid:  

Format of Cash flow statement

Cash Flow Statement
A  cash flow statement has the following items:

1. Operating activities a) Cash generated from operations b) Interest received c) Interest paid and d) Income tax paid
2. Investing activities a) Purchase of property, plant and equipment b) Prepayment of operating lease rentals c) Proceed from disposals of property ,Plant and Equipment.
3. Financing Activities a) Proceeds from issue of ordinary shares, b) dividends paid 
4.  Cash movement for the year:

Before we discuss these item click here to see the format of a cash-flow statement 
Having looked at the formart then we can discuss into briefly  what we have in a cash flow statement: ( Please note details can be found elsewhere)

Cash Book

What is a cash book?
It can be simply defined as a book where all money transactions are recorded. Money transactions will include cash in as a result of a cash sale,deposit received, rent income etc or cash out like cash purchases, rent expenses, all bills payments etc.

The cash book has two sides i.e the debit (Dr) and the credit (Cr) side and this is where the cash in and cash out is recorded respectively. In each side there are different columns but a standard simple cash book will have four columns in each side. The columns are:

1. Date: it records the date of the transaction. Each transaction is to be dated and the date corresponds with the document/voucher.
2. Folio: This is the reference number to which payment or receipt is made for. For example if  we are paying against invoice, then the folio number should be the check number we are using to pay.
3. Description: this gives a brief phrase what the transaction is all about. Take for example we are receiving some cash out of a sale, then the description should be " cash sale"
4. Amount: the last column is the amount column where amount of the transaction is posted. this is in the form of the local currency e.g. $  

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