Cash Flow Statement Using Direct Method
Particulars Amount Amount
A. Opearting activities
i. Cash collection debtors
Sales Xx
Increase/ decrease in debtors/ bill receivable (Xx)xx Xx
ii. Cash paid to supplier
Cost of good sold (xx)
Increase/decrease in stock/ inventory (Xx)xx
Increase/decrease current liabilities /creditors
Xx(xx) Xx(xx)
iii. Cash paid employee or other
Selling expneses /operating expense
Office and administrative expnes (Xx)
O/s/ due/ payable expnes ( C.L) (xx)
Prepaid /advance expense ( C.A) Xx(xx)
xx(xx) Xx(xx)
iv. Cash paid interest (Xx)
v. Cash paid tax (xx)
Net cash flow from operating activities A Xx(xx)
B. Investing activities
Sales of assets ( decrease of fixed assets ) Xx
Purchase of fixed assest ( increase of fixed assets ) (xx)
Purchase of investment/ sales of investment (xx)xx Xx(xx)
Net cash flow from investing activities B Xx(xx)
C. Fiancing activities
Issue of share capital Xx
Long term debt ( Increase/ decrease) Xx(xx)
Dividend paid (xx)
Share premium ( increase/ decrease) Xx(xx)
Net Cash Flow from Financing activities C Xx(xx)
Net Change in cash flow ( A+B+C) Xx(xx)
Add: Begging cash balance ( given trail balance- last year of bank Xx
balance )
Closing cash balance xx
Inflow Outflow
Relationship
Assets Liabilities
Negative Relation Positive relation
Assets Increase - Cash decrease Liabilities Increase- Cash +
Assets Decrease – Cash increase Liabilities decrease- Cash -
Furniture purchase Rs 400000 Loan taken Rs 2,00,000
Furniture Increase Cash +
Cash Paid ( decrease)
Excluded Heading under direct method
1. Depreciation/ appreciation
2. Reatined earning/ p/l account
3. Loss on sale of fixed assets/ profit on sale of fixed assets
4. Transfer fee related reserve.
a. Opearting activities ( related to current asset , current liabilities and revenue as well
as expn ) Investing activities ( Fixed assets , investment) Financing activities ( share
capital, share premium, long term debt, dividend, capital redemption)
Cash flow statement under direct method
Particulars Amount Amount
A. Operating activities
i. Cash collection from Debtors
Sales 1050000
Increase in debtors ( 240000-210000) (30000) 1020000
ii. Cash paid to suppliers or creditors
Cost of Good sold (810000)
Increase in inventory/stock (180000-145000) (35000)
Increase in creditors ( 80000-110000) 30000 (815000)
iii. Cash paid to employes and others
Operating expense (140000)
Increase in expesnse due (40000-25000) 15000 (125000)
iv. Cash paid interest
v. Cash paid to tax
Net Cash Flow from operating activities A 80000
B. Investing activities
Machinery sold 125000
Machinery purchase (380000)
Increase in investment (75000)
Net cash flow from investing activities B (330000)
C. Financing activities
Issue of share capital 1,00,000
Dividend paid (20000)
long term debt
Share premium
Net cash flow from financing activities C 80000
Net Change in cash Flow ( A+B+C) (80000-330000+80000) (170000)
Add: opening cash balance ( last cash balance) 210000
Closing Cash balance 40000