Cash flow statement

[Tut]

@vasa_feda, I think you may misunderstand the indirect method for preparation of cash flow statements. I won’t get into a long lecture here on fundamental accounting statements. But I did write a lengthy post a couple years ago (Cash flow report with Prepaid expenses & a Debit Note - #2 by Tut) addressing some of the issues. It won’t apply directly to your situation, but illustrates the kinds of things you need to think about when examining a cash flow statement.

The most notable point is that figures referencing various accounts on the cash flow statement when using the indirect method are not account balances. The critical part of the post linked above is:

@Tut

You must remember that the figures on the cash flow statement are not account balances, but adjustments to changes in account balances. With the indirect method, the total of debits and credits to all P&L accounts are already included in the net income figure that starts the process. The adjustments stem from transaction effects that are not in the P&L account balances at year-end.

As that post continues:

@Tut

Sometimes, it helps to look at the direct method version of a cash flow statement. Think about every entry in terms of what it would due to a nominal cash supply, not what it does to profit. And keep sight of the fact that one purpose of the cash flow statement is to relate the balance sheet to the P&L.

Generally, when looking at indirect method cash flow statements, these guidelines may help:

• Asset account increases: subtract amount from income
• Asset account decreases: add amount to income
• Liability account increases: add amount to income
• Liability account decreases: subtract amount from income

Any further comments would require seeing an English language version of your statement. Additionally, you would need to explain why you think there are errors. For example, your report lists a net change in your cash position as zero. Is that right or wrong? If wrong, how is it wrong? And I am not sure you showed the entire statement, because certain headings are missing.

As I concluded later in the linked thread:

@Tut

I don’t think there is much question: the cash flow statement is the hardest financial statement to understand, especially since many numbers will not match either the balance sheet or P&L.