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Closing the Books on 2009: The Cash Flow Report

Topic: Double-entry Bookkeeping,Financial Reports | Comments Off on Closing the Books on 2009: The Cash Flow Report

Posted on January 8, 2010 by Kelli Wall

The Cash Flow Statement shows you the changes in your cash as it flows in and out of your business over a given period of time. It helps you analyze the affects of your Balance Sheet and Income Statement activity on your cash by breaking out your spending into 3 main categories: Operations, Financing, and Investing. You can use the Cash Flow Statement to see where your cash is going and coming from and compare Net Income to Net Cash from Operating Expenses to measure quality of earnings.

The Cash Flow Statement is a great report to run at the end of the year so you can see how your cash was used. If you are working with a financial advisor, they may ask you for this report to help you evaluate your spending and offer suggestions or advice on how to manage your cash to meet your business goals.

Here is a breakdown on the main report categories:

Operating Activities Operations activities include your day-to-day business transactions used to produce and sell your goods and services.

*Depreciation Expenses are added back to your Net Income as an adjustment. Since Depreciation is a non-cash event, this adjustment reverses the expense brought in via Net Income.

Depreciation Expense* Accounts Receivable
Accounts Payable
Credit Card Liability
Other Current Liability
Inventory
Other Current Assets
Investing Activities Investing activities include changes in cash brought in from or paid out for long-term assets, like property, plant, and equipment; other investments, like stock purchases; and loans to others and receiving the payments on loans. Fixed Assets
Other Assets
Financing Activities Financing activities includes changes in cash used to purchase or issue company stock or repayments of loans. Long-term Liability
Equity
Net Change in Cash This is the total change in your cash for all activities during the given period.

How it is figured:

Cash Flow from Operating Activities + Cash Flow from Investing Activities + Cash Flow from Financing Activities = Net Change in Cash

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