Cash flows statement

Cash flows statement is an integral part of your company accounts. The statement allow your company accounts’ readers to assess and understand your company’s ability to pay suppliers on time, customers invoices settlement. In short, your cash flows statement would give your readers an idea of your business’s liquidity and solvency position.

Presentation

Generally, your cash flows statement is categorically presented in the following main three headings. Each heading is explained below according to the International Accounting Standard (IAS) 7 definitions.

Operating activities

Operating activities are the principal income-generating activities of your business. Generally, transactions you would normally include them in your profit and loss account.

Examples
  • Sales
  • Commissions
  • Royalties
  • Fees
  • Other income
  • payment to suppliers
  • salaries and wages payment
  • Income tax payment and refund
  • Insurance claims received and insurance premiums paid
  • Annuities
  • business contracts receipts and payments

Investing activities

Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Examples
  • purchase of property, plant and equipment in cash
  • costs of financing the development of the property, plant and equipment.
  • Cash paid to acquire equity or debts instruments of other businesses and interest in joint ventures.
  • Cash received from sales of equity or debts instruments of other businesses and interests in joint ventures.
  • Advances and loans issued in cash to other parties
  • Cash receipts from the repayment of advances and loans issued to other parties.
  • Payments made in cash for futures contracts, forward contracts, option contracts and swap contracts (not classified as financing activities).
  • Cash receipts from for futures contracts, forward contracts, option contracts and swap contracts (not classified as financing activities).

Financing activities

Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of your business.

Examples
  • Cash received from shares issued.
  • Payments in cash to buy shares.
  • Cash received from issuing debentures, loans, notes, bonds, mortgages and other short term or long-term borrowings.
  • Repayment of borrowing in cash.
  • Cash payments to reduce the outstanding liability of a lease.

Acceptable cash flows statement format

The IAS 7 specify two acceptable methods you can use to prepare your cash flow statement. – The direct and indirect methods.

The direct method discloses the major classes of gross cash receipts and payments.

Whereas, the indirect method adjusts the profit or loss for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

Confirmation statement

Besides, preparing and submitting your cash flows statement as part of your company accounts with Companies House, you must also submit your confirmation statement with Companies House once every 12 months.

If you require assistance with your company’s accounts and confirmation statement filings, feel free to contact our accountants. They will be more than happy to assist you.

Statement of cash flows DIRECT method template

Generally, medium-sized and large companies are required to include a statement of Cash Flows in their company accounts unless entitled to an exemption by law. There are two methods you can use the prepare your statement of cash flows according to the International Accounting Standard (IAS) 7. The direct method and the indirect method. Below is the statement of cash flows direct method template.

Success Duo Company Limited

Statement of Cash Flows for the year ended 31 December 20XX

20XX
Cash flows from operating activities
Cash receipts from customersX
Cash paid to suppliers and employees(X)
Cash generated from operationsX
Interest paid(X)
Income taxes paid(X)
Net cash from operating activitiesXX
Cash flows from investing activities
Acquisition of subsidiary X, net of cash acquired(X)
Purchase of property, plant and equipment(X)
Proceeds from sale of equipmentX
Interest receivedX
Dividends receivedX
Net cash used in investing activities(XX)
Cash flows from financing activities
Proceeds from issue of share capitalX
Proceeds from long-term borrowingsX
Payment of lease liabilities(X)
Dividends paid(X)
Net cash used in financing activities(XX)
Net increase in cash and cash equivalentsXX
Cash and cash equivalents as at 01 January 20XX (Note 1)XX
Cash and cash equivalents as at 31 December 20XX (Note 1)XX

X = incoming cash (X) = outgoing cash

Note 1: The figure shall agree to the cash and cash equivalents (cash in hands and at the bank) reported in your balance for the same accounting period.

If you have any questions about the statement of cash flows direct method template, please write to our accountants.

INDIRECT method cash flows statement template

Click here for the statement of cash flows indirect method template.

Confirmation statement

Besides, submitting your company accounts with a cash flows statement to Companies House, you must also submit your confirmation statement at least once every 12 months.

If you require assistance with preparing and filing your UK company’s accounts and confirmation statement, feel free to contact our accountants. They will be more than happy to assist you.

Statement of cash flows INDIRECT method template

Generally, medium-sized and large companies are required to include a Statement of Cash Flows in their company accounts unless entitled to an exemption by law. There are two methods you can use the prepare your statement of cash flows according to the International Accounting Standard (IAS) 7. The direct method and the indirect method. Below is the statement of cash flows indirect method template.

Success One Company Limited

Statement of Cash Flows for the year ended 31 December 20XX

20XX
Cash flows from operating activities£
Profit before taxationX
Adjustments for:
DepreciationX
Foreign exchange lossX
Investment income(X)
Interest expenseX
Increase in trade and other receivables(X)
Decrease in inventoriesX
Decrease in trade payables(X)
Cash generated from operationsX
Interest paid(X)
Income taxes paid(X)
Net cash from operating activitiesXX
Cash flows from investing activities
Acquisition of subsidiary X net of cash acquired (Note A)(X)
Purchase of property, plant and equipment (Note B)(X)
Proceeds from sale of equipment X
Interest receivedX
Dividends receivedX
Net cash used in investing activities(XX)
Cash flows from financing activities
Proceeds from issue of share capitalX
Proceeds from long-term borrowingsX
Payment of lease liabilities(X)
Dividends paid (a)(X)
Net cash used in financing activities(XX)
Net increase in cash and cash equivalentsXX
Cash and cash equivalents as at 01 January 20XX (Note 1)XX
Cash and cash equivalents as at 31 December 20XX (Note 1)XX

X = incoming cash (X) = outgoing cash

Note 1: The figure shall agree to the cash and cash equivalents (cash in hands and at the bank) reported in your balance for the same accounting period.

If you have any questions about the statement of cash flows indirect method template, please write to our accountants.

DIRECT method cash flows statement template

Click here for the statement of cash flows direct method template.

Confirmation statement

Besides, submitting your company accounts with a cash flows statement to Companies House, you must also submit your confirmation statement at least once every 12 months.

If you require assistance with preparing and filing your UK company’s accounts and confirmation statement, feel free to contact our accountants. They will be more than happy to assist you.

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