Lecture #4: How to Make Statement of Cash Flows Step By Step

Why IAS 7 and the statement of cash flows?

A statement of cash flows shows its readers where the cash of the company was generated and how it was spent.

For example, 2 companies might show the same increase in cash over the year.

However, 1 company might have generated cash in operating activities (by making profits) and show just a small spending.

The other one might have generated cash in investing activities (by sale of property) and show deficits in its operating part. Which one would you invest in?

Lecture #4: How to Make the Statement of Cash Flows

Many accountants find the statement of cash flows their personal nightmare. Why?

It is probably the most difficult statement to prepare.

It is the only statement prepared on a cash basis, not on an accrual basis. Accounting records must be adjusted to exclude non-cash items which might be quite demanding.

In today’s lecture, you will learn how to prepare the statement of cash flows using indirect method, step by step. If you follow this method carefully, you can make the statement of cash flows easily for any company.

This lecture is a simplified version of the full lectures in our premium training package the IFRS Kit.

Watch the lecture here (scroll below to download the Excel file and handout to take notes).

CLICK HERE to download the Excel file and HERE to download the Handout.