The basic cash flow statement is one of the main accounting statements.
The cash flow statement shows a business’s cash inflow and cash outflow over an accounting period. The accounting period can be any length but is usually a month or a year.
The layout of a cash flow for a company for annual reporting purposes is legally defined. However, for management account purposes the layout should be in the format most useful for managing the business. A typical and useful indirect method cash flow format for management is shown in the example below.
Basic indirect method cash flow statement
Net income 11,000
Loss on sale of assets 3,000
Gain on sale of investments -4,000
Changes in working capital -5,000
Operating activities 17,000
Purchase of assets -45,000
Proceeds from the sale of investments 10,000
Proceeds from the sale of assets 5,000
Investing activities -30,000
Issue of new capital 12,000
Issue of new debt 26,000
Repayment of debt -8,000
Dividend payments -2,000
Financing activities 28,000
Net cash flow 15,000
Beginning cash balance 1,000
Ending cash balance 16,000
Annual report of company