Page 90 - Ebook Financial Accounting 3

5.2 Preparation and Presentation of the Statement of Cash Flow

5.2.1 Analyze the items for cash inflow and cash outflow

Basically, the cash activities can be grouped into three main types as follows:

a. Operating activities

b. Investing activities; and
c. Financing activities.

Components of the
Statement of Cash Flows

Operating Activities Investing Activities Financing Activities

Figure 5.1

a) Cash flows from operating activities

Cash flows from operating activities is a section of a company's cash flow statement

that explains the sources and uses of cash from ongoing regular business activities in a
given period. This typically includes net income from the income statement, adjustments

to net income, and changes in working capital.

Examples of cash flows and outflows from Operating activities:

i. Cash receipt from sales or provision of services
ii. Cash receipt from royalties, commissions, fees and other incomes

iii. Cash payments made to purchase goods or services

iv. Cash payments made to and on behalf of employees
v. Cash payments and refund of taxes

vi. Cash receipts and payments from contracts in connection with trading

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