1. Cash flow from Operations:

Start with Income statement - reverse all non-cash losses/expenses (e.g. depreciation) and non-cash gains/revenues (accrued revenue)

Go to comparative balance sheets. Find the differences between Current Assets Year to Year, then Current Liabilities Year to Year. Apply the below:

Decreases in current assets are added to net income. Increases in current assets are subtracted from net income.

Increases in current liabilities are added to net income. Decreases in current liabilities are subtracted from net income.

This gives you cash flow from Operations.

2. Cash flow from Investing. Go to Long-term Assets, look at how they were acquired/disposed over the year. Did you use cash or make cash from a sale? Apply accordingly (add or subtract).

3. Cash flow from Financing. Go to Long term Liabilities look at how they were affected by cash. Did you use cash or make cash from a sale? Apply accordingly (add or subtract). Go to Equity accounts. Same process, generated cash or expensed cash.

Now take your starting cash position, add/subtract Operating, Investing, and Financing cash activity - this is your final cash position.

Use the following information to prepare a statement of cash flows for the current year using the indirect method. Exercise 12-13 Indirect: Preparing statement of cash flows P2 P3 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10,000 cash. c. Purchased equipment for cash; no equipment was sold