Cash Flow Statement | Bank Exam Preparation
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Cash Flow Statement | Bank Exam Preparation
Dot Nepal presents useful notes for the Bank Exam Preparation.
Cash Flow Statement
Introduction of Cash Flow Statement
Cash flow statement is that financial statement which is able to present cash inflow and out flow of organization on given period of time with systematic and scientific manner. It is statement of change in financial position. It is prepared under cash basis accounting principle where non cash transactions are prohibited for the reporting. It is accounting output of accounting cycle where all transactions are classified under operating activities, investing activities and financing activities.
Those financial which are related with main business function comes under headings of operating activities, it includes cash movement in current assets, current liabilities and figure of income statement. Investing activities is related with cash movement of fixed asset and investment along with dividend and interest income figure.
Financing activities are the combination of issue and redemption of long term debt obligation along with dividend paid.
Importance of Cash Flow Statement
Cash flow statements are the modern accounting outputs which have following importance.
- To show change in financial position of the firm,
- In order to analyze solvency position of the organization,
- In order to provide dividend relevant information to the stakeholder for effective decision making,
- In order to make working capital and capital budgeting decision,
- In order to support for the making of cash budget for future decision making,
- To support for auditing activities,
- In order to avoid drawback of accrual basis accounting,
- To make short term cash plan.
Method of Making Cash Flow Statement
Cash flow statement is prepared by using direct and indirect method. Indirect method is replaced by direct method. If organization starts operating cashflow with sale (revenue) than such method is called direct method. If organization prepare cashflow with the starting of net profit than that method is called indirect method.
Cash Flow Statement of the From Under Direct Methods
| particular |
amount |
amount |
1. Cash collection from customer
Sales
Increased or decreased on receivable
Increased on provision for bad debt
Discount allowed
2. Payment to suppliers
Cost of goods sold
Increased on creditors
Payable increased
Increased on inventory
Discount received
3.Payment to employee and operating expenses
Cash operating expenses
Increased on outstanding expenses
Increased on prepaid expenses |
|
|
| 4. interest paid interest |
|
|
5. tax paid
Net cash flow from operating activities |
|
|
B. cash flow from investing activities
purchase of fixed assets
purchase of investment
sale of investment
interest and dividend received
Net cash flow from investing activities |
|
|
C. cash flow from financing activities
issue of share & debenture
redemption of share & debenture
bank loan increased
dividend paid
premium increased
net cash flow from financing activities |
|
|
A+B+C net change in cash position
opening cash and cash equipment
closing cash and cash equivalent |
|
|
………………………………………. Limited
Cash Flow Statement
Date ============ To ========== Date
Based on NRB Guideline No. 4
A
1.0
1.1
1.2
1.3
1.4
1.5
2.0
2.1
2.2
2.3
2.4
2.5 |
Cashflow from operating activities
Cash receipt
Interest income
Commission and discount income
Foreign exchange income
Write back of loan
Other income
Cash payment
Interest expenses
Employee expenses
Operating expenses
Tax paid
Others |
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX |
|
Cash flow before working capital |
XXX |
1
2
3
4 |
(Increased) /decreased on operating current assets
(Increased) /decreased on money at call and short notice
(Increased) /decreased on other short term investment
(Increased) /decreased on loans and bills purchased
(Increased)/ decreased on other current assets |
XXX
XXX
XXX
XXX
XXX |
1
2
3
4 |
Increased /(decreased) on other operating current liabilities
Increased /(decreased) on deposit
Increased /(decreased) on certhificate of deposit
Increased /(decreased) on short term borrowing
Increased /(decreased) on other current liabilities |
XXX
XXX
XXX
XXX
XXX |
B
1
2
3
4
5 |
Cashflow from investing activities
(Increased)/ decreased on long term investment
(Increased)/ decreased on fixed assets
Interest income from long term investment
Dividend received
Other |
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX |
C
1
2
3
4 |
Cashflow from financing activities
Increased /(decreased) on long term debt like debenture bond
Increased /(decreased) on share capital
Increased /(decreased) on other liabilities
Increased /(decreased) on facilities from NRB/Refinance loan |
XXX
XXX
XXX
XXX
XXX |
| D |
Income/Expenses due to the change in exchange rate on cash and bank balance |
XXX |
| E |
Net change in cash position (A+B+C+D) |
XXX |
| F |
Opening cash and bank balance |
XXX |
| G |
Closing cash and bank balance |
XXX |
|
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