COMPOSITION OF THE STATEMENT OF CASH FLowS FO AN ECONMICALLY SOUND COMPANY ions should be and the main source of cash. It should be large enough in amount to of negative amounts in Parts II and IIl of the statement and increase the 5. PAR T 1-OPERA 0NS: The cash provided from operat amount of cash in Part IV the company is negative. If this section is positive, it could mean that ing income-producing assets, which could lead to a reduction 6, PART ll-INVESTMENTS: he armount in section ll should be negative the in cash from operations in future years 7, PART lll-FINANCNG: The anount from this section should be negative s PARTIV-CHANGE IN CASH: Should reflect a constant pattern of increase. CASH FLOW STATEMENT FORMAT indicating that the company is reducing indebtedness and paying dividends to US NET CHANGE SOURCE LOPERATIONS IL INVESTMENTS IIL FINANCING IV. CHANGE IN CASH LOCATION OF ACCOUNT CHANGES ON THE STATEMENT OF CASH FLOWS Account Cash CurrentLT Common NetDividend Current LT ICom Liability Liability Stock Income Assets Assets Source se Location IV I STEPS IN COMPLETING STATEMENT OF CASH FLOws 1. Calculate the change in cash 2. Calculate the change in each balance sheet account 3. The change in Retained Earnings is reflected on the statement by the net income and dividends Based on chart above place the change in the appropriate section of the statement of cash flows as an increase or decrease The net change in sections I, II,III when combined equals the change in cash listed in section IV 4. 5. 156 Page COMPOSITION OF THE STATEMENT OF CASH FLowS FO AN ECONMICALLY SOUND COMPANY ions should be and the main source of cash. It should be large enough in amount to of negative amounts in Parts II and IIl of the statement and increase the 5. PAR T 1-OPERA 0NS: The cash provided from operat amount of cash in Part IV the company is negative. If this section is positive, it could mean that ing income-producing assets, which could lead to a reduction 6, PART ll-INVESTMENTS: he armount in section ll should be negative the in cash from operations in future years 7, PART lll-FINANCNG: The anount from this section should be negative s PARTIV-CHANGE IN CASH: Should reflect a constant pattern of increase. CASH FLOW STATEMENT FORMAT indicating that the company is reducing indebtedness and paying dividends to US NET CHANGE SOURCE LOPERATIONS IL INVESTMENTS IIL FINANCING IV. CHANGE IN CASH LOCATION OF ACCOUNT CHANGES ON THE STATEMENT OF CASH FLOWS Account Cash CurrentLT Common NetDividend Current LT ICom Liability Liability Stock Income Assets Assets Source se Location IV I STEPS IN COMPLETING STATEMENT OF CASH FLOws 1. Calculate the change in cash 2. Calculate the change in each balance sheet account 3. The change in Retained Earnings is reflected on the statement by the net income and dividends Based on chart above place the change in the appropriate section of the statement of cash flows as an increase or decrease The net change in sections I, II,III when combined equals the change in cash listed in section IV 4. 5. 156 Page
