Welcome to

Fundamentals of Accountancy, Business and

Management 2
STATEMENT
STATEMENT OF CASH FLOWS
FLOWS

MRS. SHIELA A.
BAUTISTA
PNHS-Main, SHS Department
Fundamentals of Accountancy, Business and
Management 2
Prayer
Fundamentals of Accountancy, Business and
Management 2

QUOTE OF THE DAY

Fundamentals of Accountancy, Business and
Management 2
SHS 12 FABM2
MOST ESSENTIAL LEARNING COMPETENCY MODULE 5

At the end of this lesson, you will be

able to:1. Identify the elements of the SCI
and describe each of these items
for a merchandise business
2. Prepare an SCI for a merchandise
business using the multi-step
approach.
K to 12 Most Essential Learning Competencies With Corresponding CG Codes
Fundamentals of Accountancy, Business and Management 2, Page 586
Code: ABM_FABM12Ic-d-5 & ABM_FABM12Ic-d-6
SHS 12 FABM2
SPECIFIC OBJECTIVES MODULE5

At the end of this lesson, you will be

able to:
 Explain the merchandising type of
business.
 Identify and describe the elements of the
SCI for a merchandising business
 Solve simple problems affecting the
Statement of Comprehensive Income for a
merchandising business.
 Prepare SCI for a merchandising business
using the multi-step approach.
SHS 12 FABM2
MINE! MODULE 3

Directions: There are questions from previous module to answer. I will read the
questions twice and say “Go”. The first student to raise virtual hand and
recognized, the question is yours. Student who got the correct answer will get a
power up and 5 LOAL reward points. Winner will be stunned until after 3
questions.
SHS 12 FABM2
QUESTION NO. 1 MINE! MODULE 5

If total expenses exceeds the total

revenue, the results will be negative. It is
known as ____________.

NET LOSS
SHS 12 FABM2
QUESTION NO. 2 MINE! MODULE 5

It refers to expense incurred but not yet

paid in cash.

ACCRUED EXPENSE
SHS 12 FABM2
QUESTION NO. 3 MINE! MODULE 5

It refers to rendered service to clients but

no collected cash yet.

ACCRUED REVENUE
SHS 12 FABM2
QUESTION NO. 4 MINE! MODULE 5

True or False. Net Loss will be the result

of SCI if revenues exceed expenses.

FALSE
SHS 12 FABM2
QUESTION NO. 5 MINE! MODULE 5

Other term for Statement of

Comprehensive Income.

INCOME STATEMENT
SHS 12 FABM2
LET’S RECALL MODULE 5

ANSWER – SCI

LAGUE
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

ELEMEN
TS OF Statement of Cash Flow

SCF
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

SCF Statement of Cash Flows

• provides information on the sources
and utilization of cash during the
period.
• provides information on cash inflows
and cash outflows during the period.
• provides the net change in the cash
balance of a company for a period
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

OPERATING
result from transactions that affect income and
ACTIVITIES
expenses
INVESTING ACTIVITIES
primarily result from the acquisition and
disposal of long-term assets and other
investments, like property, plant and
equipment. ACTIVITIES
FINANCING
result from the transactions with the owner
(investments and withdrawals) and the
borrowings
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

DIRECT METHOD
shows each major class of gross cash receipts
and gross cash payments.

INDIRECT METHOD
adjusts accrual basis profit or loss for the
effects of changes in operating assets and
liabilities and effects of non-cash items.
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

NON-CASH EXPENSES
Depreciation expense is added to accrual basis
profit because depreciation decreases accrual basis
profit but does not affect cash.
Losses on sale of PPE are added to accrual
basis profit because losses on sale of PPE
decrease accrual basis but they pertain to
investing activity.
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

NON-CASH INCOME
Gains on sale of PPE are deducted from
accrual basis profit because gains on sale
of PPE increase accrual basis profit but
they pertain to investing activity.
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

Increases in operating current assets

Decreases in operating current assets
Increases in operating current liabilities
Decreases in operating current liabilities
SHS 12 FABM2
LET’S UNDERSTAND MODULE 5

Non-cash expenses – added

Non-cash income – deducted
Increases in operating current assets –
deducted (inverse relationship)
Increases in operating current
liabilities – added (direct relationship)
SHS 12 FABM2
LET’S APPLY MODULE 5

ABCDE Company’s cash balance on January 1,

2020 was P20,000. The following were the
transactions that affected cash during the period:
a. Collections from customers for the sale of
goods, P580,000
b. Cash receipt from loan obtained from a
bank, P180,000
c. Cash receipt from additional investment by
owner, P20,000
SHS 12 FABM2
LET’S APPLY MODULE 5

d. Payments to suppliers for the purchase of

inventory, P120,000
e. Payments for employee salaries, P140,000
f. Payments for rent expense, P70,000
g. Payments for utilities expense, P20,000
h. Payment for the acquisition of equipment,
P200,000
i. Cash disbursements for drawings by owner,
P60,000
SHS 12 FABM2
LET’S APPLY MODULE 5

HEADING
1st Step
ABCDE Company
Statement of Cash Flows
for the year ended December 31, 2020

Cash flows from operating activities:

Cash receipts from sale of goods P580,000
Cash paid for purchase of inventory (120,000)
OPERATING
Cash paid for salaries expense (140,000) ACTIVITIES
Cash paid for rent expense ( 70,000)
Cash paid for utilities expense ( 20,000)
Net cash from operating activities 230,000
SHS 12 FABM2
LET’S APPLY MODULE 5

2ND Step

Cash flows from investing activities:

Cash paid for the acquisition of equipment (200,000)
Net cash used in investing activities (200,000)

INVESTING ACTIVITIES
SHS 12 FABM2
LET’S APPLY MODULE 5

3RD Step

Cash flows from financing activities:

Cash proceeds from loan borrowed 180,000
Cash proceeds from investment by owner 20,000
Cash payments to owner/drawings ( 60,000)
Net cash used in financing activities 140,000

FINANCING ACTIVITIES
SHS 12 FABM2
LET’S APPLY MODULE 5

4TH Step

Net Increase in Cash 170,000

Cash, January 1, 2021 20,000
Cash, December 31, 2021 P190,000

INCREASE IN CASH
SHS 12 FABM2 ABCDE Company
Statement of Cash Flows LET’S APPLY MODULE 5
for from
Cash flows the operating
year ended December 31, 2021
activities:
Cash receipts from sale of goods P580,000
Cash paid for purchase of inventory (120,000) HEADING
Cash paid for salaries expense (140,000)
Cash paid for rent expense ( 70,000)
Cash paid for utilities expense ( 20,000)
Net cash from operating activities 230,000
OPERATING ACTIVITIES

Cash flows from investing activities:

Cash paid for the acquisition of equipment INVESTING ACTIVITIES
(200,000)
Net cash used in investing activities (200,000)
FINANCING
ACTIVITIES Cash flows from financing activities:
Cash proceeds from loan borrowed 180,000
Cash proceeds from investment by owner 20,000
Cash payments to owner/drawings ( 60,000)
Net cash used in financing activities 140,000 CASH
BEGINNING
Net Increase in Cash
170,000
Cash, January 1, 2020
20,000
Cash, December 31, 2020
SHS 12 FABM2
LET’S UNDERSTAND MODULE 2
SHS 12 FABM2
LET’S CREATE MODULE 5

Prepare the statement of cash flows in

DIRECT METHOD using the data
below.
SHS 12 FABM2
LET’S CREATE MODULE 5

GHIJ SERVICES’ cash balance on January 1, 2020 was P64,000.

The following were the transactions that affected cash during the
period:
a. Cash receipts from customer, P65,800
b. Cash paid to suppliers, P29,800
c. Cash paid to employees, P11,200
d. Cash generated from operations, P48,000
e. Cash paid for interest expense, P13,100
f. Cash receipt from additional investment by the owner, P50,000
g. Cash receipt from loan obtained from a bank, P35,000
h. Cash withdrawn by the owner from the business, P15,000
SHS 12 FABM2
Breakout Rooms LET’S APPLY MODULE 2

Click to
choose your
Click here if you want
room
to ask questions.
number
SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

Shoulder up and down Jumping Jacks Squat

SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

It is the difference between

Sales and Cost of Goods
Gross Profit Sold.
QUESTION NO. 1

Gross Purchase

Gross Sales
SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

A customer is not satisfied

Purchase allowance with the shipped product.
QUESTION NO. 2

Instead of returning the

product, what can you offer to
your customer?
Sales allowance

Sales discount
SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

It is the total cost of unsold

Purchase inventory at the end of the
QUESTION NO. 3

accounting period?

Beginning Inventory

Ending Inventory
SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

The business incurred high

General Expense utilities expenses on one of its
QUESTION NO. 4

franchise in Davao. What

category of expense is being
described?
Administrative Expense

Selling Expense
SHS 12 FABM2
EXERQUIZ – ANSWER BY DOING MODULE 3

This account is use when the

Freight in shipping fee of a customer
QUESTION NO. 5

will be shouldered by the

business.

Freight out

Sales Discount
SHS 12 FABM2
LET’S SUMMARIZE MODULE 2

GENERALIZATION
 Elements of Statement of Comprehensive
Income in Merchandise Business
 Solve simple problems

Identify the elements of the SCI and describe each of these

items for a merchandise business.
Prepare an SCI for a merchandise business using the multi-
step approach.
• Double Jeopardy
• X2
• 50-50
• Eraser ACCOUNTING 2
• Immunity
• Time Freeze
• Pass it on
• Lifeline