Chapter 12, Problem 6DQ

To determine

Cash Flow Statement:

Cash flow statement is that statement in which, transaction related to cash are recorded. It is mandatory report and included in the financial statement of the company. It is divided into three parts operating activities, investing activity, and financial activity

Operating Activity:

Operating activity is the first part of the cash flow statement. The main focuses of the operating activity on the cash inflow and outflow from the selling goods, providing services and manufacturing. Long term capital and investing cost are not included in the operating activity.

Financial Activity:

Financial activity is the part of the cash flow statement. Financial activity involves the long term liability, borrowing and stockholder’s equity. All the changes in the long term liability, equity and borrowings reported in the financial statement.

Investing Activity:

Investing activity is the third part of the cash flow statement which gives the information related to the acquisition and disposal of the long term assets of the company such as land and building, investment and plant.

To Identify: Cash flow from operating activities

Explanation of Solution

Company Name
Statement of cash flow
For the Year Ended 31 December 20XX
Cash flow from operating activities:	Amount ($)	Amount ($)
Net profit before tax and extraordinary items		xxx
Adjustments for:
Depreciation expenses	xxx
Patent written off	xxx
Foreign exchange	xxx
Investment profit	xxx
Gain or loss on sale of fixed assets	xxx
Profit on building	(xxx)
Loss on equipment	xxx
Interest/dividend	xxx	xxx
Operating profit before working capital change		xxx
Adjustment for:
Trade and other receivable	xxx
Inventories	xxx
Allowance for doubtful account	xxx
Note payable(short term)	xxx
Trade payable	xxx	xxx
Cash generated from operation		xxx
Interest paid	(xxx)
Direct taxes	(xxx)	xxx
Cash extraordinary items		xxx
Deferred revenue		xxx
Net cash from operating activities		xxx