Strand 2 Chapter 24 Topic 66 Preparing a
- Slides: 30
Strand 2 Chapter 24: Topic 66 Preparing a Cash Flow Statement (pages 296– 7)
Preparing a Cash Flow Statement What is Cash Flow? • Cash flow is the amount of money coming into and going out of a business over a period of time. • Cash is described the ‘lifeblood’ of a business. • What do you think this means? 2
Preparing a Cash Flow Statement What Is a Cash Flow Statement? • A cash flow statement or cash budget shows the planned flow of cash in and out of a business over time. It shows: o The expected income over a period of time o The expected total payments divided into fixed costs and variable costs for the same period o The expected net cash (expected receipts minus expected payments) each month o The opening cash and closing cash each month 3
Preparing a Cash Flow Statement Traders Ltd cash flow statement • In this example, we’ll look at how to prepare a cash flow statement for Traders Ltd. • This is taken from pages 296– 7 of the textbook. • Follow each step to see how the account builds. 4
Preparing a Cash Flow Statement The following information relates to Traders Ltd for the four-month period January to April. There was an opening cash amount of € 4, 500 on 1 January. 5
Preparing a Cash Flow Statement Here is the blank statement. Details RECEIPTS PAYMENTS Jan Feb Mar Apr Total 6
Preparing a Cash Flow Statement Enter OPENING CASH – January. Details RECEIPTS PAYMENTS OPENING CASH Jan Feb Mar Apr Total 4, 500 7
Preparing a Cash Flow Statement Enter OPENING CASH – Total. Details RECEIPTS PAYMENTS OPENING CASH Jan Feb Mar Apr Total 4, 500 8
Preparing a Cash Flow Statement Next, enter planned RECEIPTS. Details RECEIPTS PAYMENTS OPENING CASH Jan Feb Mar Apr Total 4, 500 9
Preparing a Cash Flow Statement Planned sales … Details RECEIPTS Sales PAYMENTS OPENING CASH Jan Feb 20, 900 27, 000 24, 500 24, 200 96, 600 4, 500 Mar Apr Total 4, 500 10
Preparing a Cash Flow Statement Expected receipt of government grant (March) … Details RECEIPTS Sales Government grant PAYMENTS OPENING CASH Jan Feb 20, 900 27, 000 24, 500 10, 000 24, 200 96, 600 10, 000 4, 500 Mar Apr Total 4, 500 11
Preparing a Cash Flow Statement Enter totals for all planned receipts (Jan–Apr). Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS OPENING CASH Jan Feb 20, 900 27, 000 4, 500 Mar 24, 500 10, 000 34, 500 Apr Total 24, 200 96, 600 10, 000 106, 600 4, 500 12
Preparing a Cash Flow Statement Next, enter planned PAYMENTS. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS OPENING CASH Jan Feb 20, 900 27, 000 4, 500 Mar 24, 500 10, 000 34, 500 Apr Total 24, 200 96, 600 10, 000 106, 600 4, 500 13
Preparing a Cash Flow Statement Planned purchase of materials … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials OPENING CASH Jan Feb 20, 900 12, 500 27, 000 14, 000 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 Apr Total 24, 200 20, 500 96, 600 10, 000 106, 600 62, 800 4, 500 14
Preparing a Cash Flow Statement Planned purchase of new computer system … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system OPENING CASH Jan Feb 20, 900 12, 500 27, 000 14, 000 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 Apr Total 24, 200 20, 500 9, 600 96, 600 10, 000 106, 600 62, 800 9, 600 4, 500 15
Preparing a Cash Flow Statement Planned wage payments … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages OPENING CASH Jan Feb 20, 900 12, 500 1, 800 27, 000 14, 000 1, 800 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 Apr Total 24, 200 20, 500 9, 600 1, 800 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 4, 500 16
Preparing a Cash Flow Statement Planned electricity bills … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity OPENING CASH Jan Feb 20, 900 12, 500 1, 800 27, 000 14, 000 1, 800 250 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 Apr Total 24, 200 20, 500 9, 600 1, 800 300 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 4, 500 17
Preparing a Cash Flow Statement Planned telephone bills … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 27, 000 14, 000 1, 800 250 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 Apr Total 24, 200 20, 500 9, 600 1, 800 300 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 4, 500 18
Preparing a Cash Flow Statement Planned car expenses (fleet service in March) … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 27, 000 14, 000 1, 800 250 150 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 4, 500 19
Preparing a Cash Flow Statement Planned advertising … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 27, 000 14, 000 1, 800 250 150 210 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 4, 500 20
Preparing a Cash Flow Statement Planned insurance payment … Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 27, 000 14, 000 1, 800 250 150 210 790 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 4, 500 21
Preparing a Cash Flow Statement Enter totals for all planned payments (Jan–Apr). Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 27, 000 14, 000 1, 800 250 150 210 790 17, 200 4, 500 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 4, 500 22
Preparing a Cash Flow Statement Enter NET CASH (Total Receipts LESS Total Payments). Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 23
Preparing a Cash Flow Statement Enter CLOSING CASH for January (Net Cash PLUS Opening Cash). Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 24
Preparing a Cash Flow Statement Carry Closing Cash from January into February. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 25
Preparing a Cash Flow Statement Enter Closing Cash for February. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 20, 360 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 26
Preparing a Cash Flow Statement Carry Closing Cash from February into March. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 20, 360 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 20, 360 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 27
Preparing a Cash Flow Statement Enter Closing Cash for March. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 20, 360 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 20, 360 35, 880 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 28
Preparing a Cash Flow Statement Carry Closing Cash from March into April. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 20, 360 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 20, 360 35, 880 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 35, 880 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 29
Preparing a Cash Flow Statement Enter Closing Cash for April. Details RECEIPTS Sales Government grant TOTAL RECEIPTS PAYMENTS Materials Computer system Wages Electricity Telephone Motor expenses Advertising Insurance TOTAL PAYMENTS NET CASH OPENING CASH CLOSING CASH Jan Feb 20, 900 12, 500 1, 800 180 150 210 14, 840 6, 060 4, 500 10, 560 27, 000 14, 000 1, 800 250 150 210 790 17, 200 9, 800 10, 560 20, 360 Mar 24, 500 10, 000 34, 500 15, 800 1, 800 220 950 210 18, 980 15, 520 20, 360 35, 880 Apr Total 24, 200 20, 500 9, 600 1, 800 300 150 210 32, 560 – 8, 360 35, 880 27, 520 96, 600 10, 000 106, 600 62, 800 9, 600 7, 200 550 400 1, 400 840 790 83, 580 23, 020 4, 500 30
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