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BAMAJ2.-CHAPTER3

The document outlines the Statement of Cash Flows and the Statement of Changes in Equity, detailing the inflow and outflow of cash from operating, investing, and financing activities of a company. It provides examples of cash flows for two businesses, including calculations for operating, investing, and financing activities, as well as the preparation of the respective financial statements. Additionally, it describes the components of the Statement of Changes in Equity for sole proprietorships, including capital balances, investments, net income, and withdrawals.

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6 views

BAMAJ2.-CHAPTER3

The document outlines the Statement of Cash Flows and the Statement of Changes in Equity, detailing the inflow and outflow of cash from operating, investing, and financing activities of a company. It provides examples of cash flows for two businesses, including calculations for operating, investing, and financing activities, as well as the preparation of the respective financial statements. Additionally, it describes the components of the Statement of Changes in Equity for sole proprietorships, including capital balances, investments, net income, and withdrawals.

Uploaded by

chubz fun
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Statement of

Cash Flows and


Statement of
Changes in Equity
is a financial statement that
Statement presents the inflow and outflow of
cash from operating, investing, and
of Cash financing activities of a company

Flows during a specific period. It provides


vital information about the financial
health of a business by detailing the
sources and uses of cash.
Activities of an entity related to
their main revenue generating
activities of providing goods and
Operating
services.
Activities
Where to see in the FS?
Income statement, Balance sheet
(current assets), Balance sheet
(current liabilities)
Activities of an entity related to
sale and purchase of long-term
Investing
assets and other investments. Activities
Where to see in the FS?
Balance sheet (noncurrent assets)
Activities of an entity related to
acquisition of funding for the use
Financing
of the entity. Activities
Where to see in the FS?
Balance sheet (noncurrent
liabilities and equity)
Operating activities
(net income activities)
Cash inflows
Cash received from sales and service revenue
Collection of accounts receivable
Refunds from suppliers

Cash outflows
Payments to suppliers
Payment of operating expenses like salaries, rent, utilities, and
taxes
Payment for interest expense
Charity contributions
Cash refund to customers
Investing activities
(Noncurrent assets activities)
Cash inflows
Cash proceeds from selling productive assets like
property, plant, and equipment
Cash proceeds from selling investments in equity
securities of other companies

Cash outflows
Payments for the purchase of productive assets like
property, plant, and equipment
Payments to acquire investments in equity securities
Financing activities
(Non-current liabilities and equity activities)
Cash inflows
Cash investments by the owner
Cash proceeds from issuance of share capital
Cash proceeds from long-term borrowing

Cash outflows
Cash withdrawal by the owner
Payments of cash dividends to shareholders
Payments of long-term borrowing
Lorie de Generous established her own service company. She

Preparation
invested Php. 2,000,000 to open the business and has purchased
some computer equipment worth 120,000 and office furniture worth

of Statement
80,000. During the year, 500,000 revenues were earned, 200,000
of which were on account. Salaries paid to employees amounted to

of Cash Flow
150,000, office rent payment is 40,000, and utilities paid amounted
to 30,000. Receivables collected amounted to 70,000. The owner
withdrew 100,000 for a personal emergency. At the time when the
carrying value of the furniture was 70,000, Señora Lorie sold it for
75,000 cash.

1. How much is the entity's cash flow from operating activities?


2. How much is the entity's cash flow from investing activities?
3. How much is the entity's cash flow from financing activities?
4. How much is the cash balance at the end of the year?
5. Prepare the entity's statement of cash flows.
Christy Joy invested Php 1,500,000 to open a bakery. She
purchased baking machine worth Php 100,000 and vehicle worth
Php 200,000. During the year, she earned Php 600,000 in revenues,
Problem 2 Php 250,000 of which was on account. Salaries paid were Php
180,000 and utilities paid amounted to Php 20,000. She collected
Php 150,000 from receivables and paid for the borrowed baking
supplies worth Php 15,000 to a supplier last year. She withdrew Php
120,000 for personal use. Andrea sold her vehicle for Php 190,000,
which had a book value of Php 180,000.

1. How much is the entity's cash flow from operating activities?


2. How much is the entity's cash flow from investing activities?
3. How much is the entity's cash flow from financing activities?
4. How much is the cash balance at the end of the year?
5. Prepare the entity's statement of cash flows.
Forms of Business Organization

Sole Proprietorship Partnership Corporation


Statement A financial report that tracks
of Changes changes in a company's equity

in Equity over a specific time period.


For a sole proprietorship type of business, the Statement of
Changes in Equity includes the following items:
Capital balance at the start of the accounting period.
Any additional investments and contributions by the
owner.
Net income enjoyed or net loss suffered by the
company.
Any withdrawals by the owner.
Capital balance at the end of the accounting period
(adjusted capital balance).
Statement of Changes in Equity
Recognition Company, a sole proprietorship trading business
owned by Lorie de Generous, has been operating successfully
for years now. The capital of the owner at the start of the
accounting period, January 1, 2025 amounted to P2,789,674.
During the year, the owner decided to raise the capital balance
by P400,000 worth of additional investment of cash. The entity
enjoyed tremendous sales and reported net income in the
income statement amounting to P789,674. The owner, however,
withdrew P50,000 cash for a personal emergency purpose. No
other equity activities have been noted during the year.
Required: Prepare the entity's Statement of Changes in Equity
for the year ended December 31, 2025.
Statement of Changes in Equity

2025

2024

2025
Triple J Partnership
Statement of Changes in Equity
For the year ended December 31, 2025
June Jane Jean Total
2025
2025

2025

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