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Direct method from operating activities


                       The  direct  method  identifies  cash  inflows  by  sources  of  operating  cash  and  cash
               outflows by uses. The difference between total cash inflows and total cash outflows is the net

               cash flow from operating activities. Hence cash flows can be listed as follows:

                       Cash inflows


                          a.  Cash received from sales which include cash sales and cash received from

                              debtor
                               Cash received from trade debtor

                               = Opening trade debtor + Credit sales – Closing trade debtors



                          b.  Other income received such as rent received, investment income received etc.

                                                Revenue/Income Account

                                                      RM                              RM

                             Bal b/d (accrual)        xx    Bal b/d (prepaid)         xx

                             SOCI                     xx    Cash                      xx

                             Bal c/d (prepaid)        xx    Bal c/d (accrual)         xx

                                                      xx                              xx



                       Cash outflows


                          a.  Cash paid for purchases which include cash purchases and cash paid to

                              suppliers.



                               Cash received from trade creditors
                               = Opening trade creditors + Credit purchases – Closing trade creditors



                          b.  Cash paid for operating expenses such as salaries and wages, rent and rates
                              etc.









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