Cashflow statement Reference items: exhibit 12-11, 12-3 and exhibit 12-15, exhibit 12-8 Exhibit 12-2 Operating

cash flows Investing cash flows Current assets Long term assets Current liabilities Long term liabilities Owners equity Operating cash flows Financing cash flow

Classification of cash flow items Operating Interest received Dividends received Interest paid Dividends paid Preparing by direct method Follow template: Exhibit 12-11 COMPUTING CASH FLOW AMOUNTS (for operating activities only, investing and financing under indirect) Follow template: Exhibit 12-15 1. Just refer to Exhibit 12-15 Cash receipts Accounts receivable Beginning Collections balance Sales (Write offs) Ending balance Interest (or dividend) receivable Beginning Interest balance received Interest revenue Ending balance Investing Financing

Add to table: MINUS WRITE OFF FROM COLLECTIONS (if amount available)

Cash payments For inventory

Inventory Beginning COGS balance Purchases Ending balance Other expenses Prepaid expenses Beginning Expiration of balance prepaid expense Cash payments Ending balance

Accounts payable Cash Beginning payments balance Purchases Ending balance

Accrued liabilities Cash Beginning payments balance Accrued expenses Ending balance

Operating expenses (exclude wages and non cash expenses e.g. depreciation and bad debt) Expiration of prepaids Accrued expenses Other cash payments Ending Balance

MINUS NON CASH EXPENSES IF INCLUDED IN OPERATING EXPENSE

Payments for wages/interest and income tax Wages payable Cash paid Beginning balance Wages Ending balance For operating activities Do not include non-cash expenses such as depreciation, amortization, noncash gains/loss Interest and income tax payable Cash paid Beginning balance Interest or income tax Ending balance

For investing activities Record dollar amount of sale of fixed asset, not gains or loss on sale

Non-cash activities not recorded but reported in separate schedule or notes (Exhibit 12-14)

For financing activities Share dividend has no effect on cash Non-cash activities not recorded but reported in separate schedule or notes (Exhibit 12-14)

Preparing by indirect method Follow template: Exhibit 12-3 Operating activities 1. Refer to template Exhibit 12-3 2. Addendum: Other noncash items include writedowns/writeoffs/impairment loss/bad debt expense 3. For analyzing current assets and liabilities do not analyze dividend receivable/payable, interest receivable/payable and income tax payable 4. Beware of share of profit due to equity method investments 5. Refer to Exhibit 12-15 for calculating interest paid and received, dividends received and income tax paid Calculating interest receivable and payable Interest receivable Beginning Interest balance received Interest revenue Ending balance Interest payable Interest paid Beginning balance Interest expense Ending balance

Same for dividends receivable and income tax payable

Investing activities 1. Just refer to Exhibit 12-8 Computing acquisitions and sale of fixed assets Fixed assets, net Beginning Depreciation balance for the year Acquisitions NBV of sold asset Ending balance Fixed assets, net + Acquisitions Depreciation Book value of asset sold = New fixed asset, net Fixed assets + Acquisitions Original cost of sold asset = New fixed assets

Accumulated depreciation + Depreciation for the year Depreciation on sold asset = Ending balance For investments and loans (receivable) Investments Beginning Investments balance sold Investments purchased Ending balance Loans receivable Beginning balance Loans made Repayment of loans Ending balance

To add gains or subtract losses on sale of fixed assets and investments

Financing activities 1. Just refer to Exhibit 12-9 adapted Non-cash investing and financing activities Separately disclose such items For issuance of shares for fixed assets, acquisition of fixed assets should be reduced and cash from issuance of shares should be reduced For acquiring fixed assets with note payable, acquisition of fixed assets should be reduced and cash from note payable should be reduced Share dividends included in exhibit 12-9 adapted. Asset revaluation acquisition of fixed assets should be reduced