[Chapter 13]03 Cash Flow Statement

The preparation of the cash flow statement is much more difficult than the balance sheet and income statement, but compared with the consolidated financial statements Generally speaking, it should be simpler. So far, I have not prepared a complete cash flow statement by hand, so from a practical point of view, I am still lacking in the preparation of cash flow statements.

However, for the CPA exam, judging from the test questions in recent years, most of them appear in the form of objective questions, which mainly test the calculation of some major items. Therefore, from the perspective of the exam, I personally think that for the cash flow statement, you only need to master the filling in of some important items. The following summary is for reference only, and the collected information mainly comes from "Explanation of Accounting Standards for Business Enterprises (2008)":

1. The concept and function of the cash flow statement

1. Definition: The cash flow statement is a statement that reflects the inflow and outflow of cash and cash equivalents of an enterprise during a certain accounting period.

2. Function:

(1) Helps to evaluate the company’s ability to pay, debt repayment and turnover;

(2) Helps to predict The future cash flow of the enterprise;

(3) It helps to analyze the quality of the enterprise's earnings and the factors affecting the net cash flow, and to grasp the cash flow of the enterprise's operating activities, investment activities and financing activities, which can be done from the perspective of cash flow Understand the quality of net profit and provide information for analyzing and judging the financial prospects of the enterprise.

2. Basis for Preparing the Cash Flow Statement

The cash flow statement is prepared on the basis of cash and cash equivalents and is divided into operating activities, investing activities and financing activities. It is based on the cash basis. Prepared in principle, the profit information under the accrual basis is adjusted to the cash flow information under the cash basis.

(1) Cash

Cash refers to a company’s cash on hand and deposits that can be used for payment at any time. Deposits that are not readily available for payment are not considered cash. Cash mainly includes:

1. Cash on hand. Cash on hand refers to the cash held by the enterprise that can be used for payment at any time, which is consistent with the accounting content of the "cash on hand" account.

2． Bank deposits. Bank deposits refer to deposits deposited by enterprises in financial institutions that can be withdrawn at any time. The accounting content of the "bank deposit" account is basically the same, but does not include deposits that cannot be used for payment at any time. For example, time deposits that cannot be withdrawn at any time should not be treated as cash; time deposits that can be withdrawn by notifying the financial institution in advance should be included in the scope of cash.

3． Other monetary funds. Other monetary funds refer to foreign deposits, bank draft deposits, cashier's check deposits, credit card deposits, letter of credit deposits and investment deposits deposited in financial institutions, etc., which are consistent with the accounting content of the "other monetary funds" account.

(2) Cash equivalents

Cash equivalents refer to investments held by an enterprise with short term, strong liquidity, easy conversion into known amounts of cash, and little risk of value changes. . Among them, "short term" generally refers to expiration within 3 months from the date of purchase. For example, short-term bonds that mature within 3 months can be circulated in the securities market.

Although cash equivalents are not cash, their payment capabilities are not much different from cash and can be regarded as cash. For example, in order to ensure the ability to pay, an enterprise holds the necessary cash. In order to prevent cash from being idle, it can purchase short-term bonds, which can be liquidated at any time when cash is needed. The definition of cash equivalents itself includes four conditions for judging whether an investment is a cash equivalent, namely, ① short term; ② strong liquidity; ③ easy to convert into a known amount of cash; ④ little risk of value change. Among them, short term and strong liquidity emphasize the liquidity, while the ease of conversion into known amounts of cash and the small risk of value changes emphasize the ability to pay. Cash equivalents typically include short-term bond investments maturing within 3 months. The amount of equity investments that can be realized is usually uncertain, and therefore they are not cash equivalents.

3. Preparation methods of cash flow statement

(1) Direct method and indirect method

When preparing cash flow statement, the cash flow from operating activities is presented. There are two methods: one is the direct method and the other is the indirect method.

Under the direct method, the operating income in the income statement is generally used as the starting point, the increase or decrease in items related to operating activities is adjusted, and then the cash flow generated by operating activities is calculated.

Under the indirect method, it refers to taking net profit as the starting point, adjusting income, expenses, non-operating income and expenses and other related items that do not involve cash, excluding the impact of investment activities and financing activities on cash flow. Based on this, the cash flow generated from operating activities is calculated. Since net profit is determined based on the accrual basis and includes income and expenses related to investing activities and financing activities, adjusting net profit to cash flow from operating activities actually means converting the net profit into cash flow determined based on the accrual basis. Net profit is adjusted to net cash inflow and excludes the impact of investing activities and financing activities on cash flow.

The cash flow statement standards stipulate that enterprises should use the direct method to prepare cash flow statements, and also require information in the notes to be adjusted to cash flow from operating activities based on net profit.

(2) Working paper method or T-type account method (omitted)

3. Preparation of main statement items of cash flow statement

(1) Operating activities Cash flow generated

1. Cash received from selling goods and providing services

(1) Project content: This project reflects the actual cash received by the enterprise from selling goods and providing services. Including sales revenue and the value-added tax output tax that should be charged to buyers, specifically including: cash received from selling goods and providing services in the current period, as well as cash received in the current period from selling goods and providing services in the previous period, and prepayments received in the current period. , minus the cash paid for the sales of goods returned in this period and the goods returned in previous periods. The cash received from the company's sales of materials and purchasing and selling services is also reflected in this project.

(2) Calculation: Cash received from selling goods and providing services = operating income + VAT output tax incurred in the current period + accounts receivable (beginning balance - ending balance) (bad debts are not deducted) Preparation) + Notes receivable (Beginning balance – Closing balance) + Advance receivables (ending balance – Beginning balance) – The amount of accounts receivable and notes receivable reduced due to the receipt of non-cash assets to offset debts in the current period – Occurred in the current period Cash discount - bill discount interest incurred in the current period (without recourse) + interest on interest-bearing bills received ± other special adjustment business.

2. Refund of taxes and fees received

(1) Project content: This project reflects the various taxes and fees returned by the enterprise, such as value-added tax, business tax, Additional rebates for income tax, consumption tax, customs duties and education fees, etc.

(2) Calculation: Tax refund received = refunded (VAT + consumption fee + business tax + tariff + income tax + education surcharge), etc.

3. Other cash received related to operating activities

(1) Project content: This item reflects that in addition to the above items, other cash received by the enterprise related to operating activities Cash, such as fine income, cash received from operating leased fixed assets, rental income received from investment real estate, cash income compensated by individuals in the loss of current assets, other government subsidy income except tax refunds, etc. Other cash related to operating activities, if the value is large, should be reflected in separate items.

(2) Calculation: Other cash received related to operating activities = cash inflow related to other operating activities other than the above-mentioned operating activities. Including fine income received by the enterprise, cash compensation income belonging to current assets, rent and deposit income from operating leases, interest income from bank deposits, and other government subsidy income other than tax refunds, etc.

4. Cash paid for purchasing goods and receiving services

(1) Project content: This item reflects the actual cash paid by the enterprise to purchase materials, goods and receive services, including the payment for goods And the value-added tax input tax paid together with the payment for goods, specifically including: cash for goods purchased in the current period; cash payment for services received, as well as unpaid amounts for goods purchased and services received in the current period and advance payments for the current period, minus current period Cash received will be refunded for purchases made. The capitalized portion of borrowing interest incurred for the purchase of inventories should be reflected in the item "cash paid for distribution of dividends, profits or repayment of interest".

(2) Calculation: Cash paid for purchasing goods and receiving services = operating costs + inventory items (end balance - beginning balance) (without deducting inventory depreciation reserves) + input VAT incurred in the current period + Accounts payable items (beginning balance - closing balance) + notes payable items (beginning balance - closing balance) + prepayment items (ending balance - beginning balance) - accounts payable and notes payable reduced by using non-cash assets to offset debts in the current period Amount + interest on notes payable in the current period - cash discounts obtained in the current period + cost of purchased goods damaged in the current period - costs of products sold in the current period and product costs in ending inventory that are not included in the purchase of goods or payment for labor services Cash expenses (such as unpaid wages, employee benefits and manufacturing expenses other than materials) ± other special adjustments.

5. Cash paid to and for employees

(1) Project content: This project reflects the actual cash paid to and for employees by the enterprise, including the cash paid by the enterprise In order to obtain the services provided by employees, various forms of remuneration and other related expenses were actually paid in this period, such as wages, bonuses, various allowances and subsidies paid to employees, and other expenses paid to employees, excluding those paid to current employees. salaries of construction workers. The wages paid to personnel working on projects under construction are reflected in the item "Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets".

The medical, pension, unemployment, work-related injury, maternity and other social insurance funds, supplementary pension insurance, and housing provident funds paid by the enterprise for its employees, the commercial insurance paid by the enterprise for its employees, and the compensation given due to the termination of the labor relationship with employees. Compensation, cash-settled share-based payment, and other welfare expenses paid by the enterprise to or for employees should be included in the "payments for the purchase and construction of fixed assets, intangible assets and other long-term assets" according to the nature of the employees' work and service objects. reflected in the items "Cash" and "Cash paid to and for employees".

(2) Calculation: Cash paid to and for employees = Employee salaries included in product costs and expenses for the current period + Employee salaries payable (excluding construction-in-progress personnel) (beginning balance – ending balance) .

6. Various taxes and fees paid

(1) Project content: This project reflects various taxes and fees paid by the enterprise in accordance with regulations, including taxes and fees incurred and paid in the current period , as well as the taxes and prepaid taxes incurred in previous periods, such as business tax, value-added tax, income tax, education surcharge, stamp tax, real estate tax, land value-added tax, vehicle and vessel use tax, etc. paid in this period.

(2) Calculation: Various taxes paid = business taxes and surcharges + income tax expenses + stamp duties and other taxes in administrative expenses + value-added tax paid + taxes payable (excluding value-added tax ) (Beginning balance - Closing balance).

7. Other cash paid related to operating activities

(1) Project content: This item reflects other cash paid by the enterprise related to operating activities in addition to the above items. , such as fines paid, travel expenses paid, business entertainment expenses, insurance premiums, cash paid for operating leases, etc. Other cash related to operating activities, if the amount is large, should be reflected in separate items.

(2) Calculation: Other cash paid related to operating activities = expenses other than employee salaries, taxes paid and unpaid cash expenses in "administrative expenses" (that is, other expenses paid) + Expenses other than employee salaries and unpaid cash expenses in "manufacturing expenses" (i.e. other expenses paid) + Expenses other than employee salaries and unpaid cash expenses in "sales expenses" (i.e. other expenses paid) + Settlement fees paid in "Financial Expenses" + Travel expenses paid in advance for employees in "Other Receivables" + Operating lease rent paid in "Other Accounts Payable" + Penalties paid in "Non-Operating Expenses", etc. .