This document provides guidance on preparing a cash flow statement using the indirect method. It includes a cash flow statement template and explanations of the general rules for reconciling net income to net cash provided by operations. Specific examples are given for cash flows from investing and financing activities such as additions/disposals of property, plant, and equipment, increases/decreases in debt, and payments of dividends.

1. Cash flow StatementPreparation GuideusingIndirect MethodBy http://www.budgetingforecastingprocess.com

2. Cash flow Statement Preparation Guide by http://budgetingforecastingprocess.com/Cash Flow Statement TemplateNet IncomeReconciliation to net cash provided (used) by operationsCash provided (used) by OperationsCash provided (used) by Investing ActivitiesCash provided (used) by Financing ActivitiesCash provided (used) by Financing ActivitiesNet increase (decrease) in cash and equivalentsCash and equivalents, beginning of the yearCash and equivalents, end of the year

3. Cash flow Statement Preparation Guide by http://budgetingforecastingprocess.com/Reconciliation to net cash provided (used) by operationsGeneral Rules:Deduct increases in noncash current assets.Add decreases in noncash current assets.Deduct decreases in current liabilities.Add loss (or deduct gain) from sale of fixed assets.Add loss (or deduct gain) on extinguishment of debts.

4. Cash flow Statement Preparation Guide by http://budgetingforecastingprocess.com/Net IncomeReconciliation to net cash provided (used) by operations:Income charges not affecting cash. Example: DepreciationChanges in working capital. Example: Inventories Other current assets Account receivablesAccount payablesAccrued liabilitiesIncome taxes, etcCash provided (used) by Operations

5. Cash flow Statement Preparation Guide by http://budgetingforecastingprocess.com/Cash provided (used) by Investing ActivitiesExample:Less: Additions to property, plant and equipment.Add: Disposal of property, plant and equipment.Less: Increase in other assetsLess: Decrease in other liabilities

6. Cash flow Statement Preparation Guide by http://budgetingforecastingprocess.com/Cash provided (used) by Financing ActivitiesExample:Add: Additions to long term debt.Less: Reduction in long term debt.Add: Increase in note payables.Add: Proceed from exercise of options.Less: Dividends paid.

7. Cash Flow Statement Templateby http://budgetingforecastingprocess.com/Net IncomeReconciliation to net cash provided (used) by operationsCash provided (used) by OperationsCash provided (used) by Investing ActivitiesCash provided (used) by Financing ActivitiesCash provided (used) by Financing ActivitiesNet increase (decrease) in cash and equivalentsCash and equivalents, beginning of the yearCash and equivalents, end of the year

8. By http://www.budgetingforecastingprocess.comThe End