Cash flow statement(现金流量表的编制方法).docVIP

Issue 1 Disclosure: cash flow statements General format of cash flow statement: Cash Flow Statement for the year ended 30 June 2006 Cash flows from operating activities Cash receipts from customers+ Cash paid to suppliers and employees- Cash generated from operations Interest paid- Income taxes paid- Net cash used in operating activities Cash flows from investing activities Purchase of investments- Purchase of property, plant and equipment- Proceeds from sale of equipment+ Interest received+ Dividends received+ Net cash used in investing activities Cash flows from financing activities Proceeds from issue of share capital+ Proceeds from long-term borrowings+ Repayment of borrowings- Dividends paid- Net cash used in financing activities Net increase (decrease) in cash and cash equivalents+/- Cash and cash equivalents at beginning of period+ Cash and cash equivalents at end of period+ As cash flow statement is introduced, what is meant by the term ‘cash’? Definition of cash is important because cash cannot generate cash flow in the context of preparing a cash flow statement and cash should be recorded in ‘Cash and cash equivalents at beginning of period’. Cash comprises cash on hand and demand deposits. Cash equivalents are short-term highly liquid investments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of changes in value. Examples: bank and non-bank bills, money market deposits close to maturity, investment within a term of 3 months or less. Bank overdraft is treated as a financial activity. Account receivable (subject to adjustment by bad debts) and equity securities (high risk in changes in value) are excluded from the definition of cash. Classification of cash flow activities Operating activities Associated with revenues and expenses E.g. to lenders for interest and borrowing costs Investing activities Associated with movement in non-current assets and investment E.g. to sale and purchase of shares and