Statements of cash flows is one of the three financial statements of business important supplement to the balance sheet and report results of business activities. No little business “headaches” when done set flow statement because is very easy to errors and confusion. In this article, Accnet will guide you how to report cash flows with the knowledge related to business avoid mistakes when implementing.
1. Statements of cash flows, what is?
Statements of cash flows (Cash flow statement) is part of the financial statements, summary of cash flow movements into and out of a business during a certain period of time. When the flow of money into larger cash outflow, it is a sign of good financial situation for the business.
In the cash flow statement there are 3 types of cash flow are different:
- Cash flows from operating activities: include the revenues and expenses from business activities, usually the cash flows related to the production, purchase, sales and other expenses.
- Cash flows from investing activities: includes revenues and expenses from the purchase or sale of property.
- Cash flows from financing activities: include the proceeds from the loans or the money spent to pay the debt.
2. How to report cash flows based on?
Before you learn how to do reporting cash flows, cash flows, it is important to understand the basis of reporting cash flows. The establishment flow statements based on the accounting documents, the following:
- Balance sheet
- Report results of business activities
- Reporting cash flows of the previous period
- Narrative report financing
- Figures in windows account details
- Based on the accounting documents that are related to another: spreadsheet and allocated depreciation of fixed assets, general ledger, case,...
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3. The principles to be followed in the way of reporting cash flows
According to circular 133/2016/TT-BTC, regulations, principles of reporting cash flows:
Encourage business reporting cash flows. How to report cash flows, business cash flow guidance for the most common transactions, business grounded in nature each transaction to present the cash flow out into a suitable way.
On the statement of cash flows, the short-term investments are considered cash equivalents includes only the short-term investments term recovery or maturity of not more than 3 months have the ability to switch easily and without risk of conversion into money from the date of purchase investments that at the time of the report.
Business to present the cash flow on the statement of cash flows under three activities: business, finance and investment
- Cash flow from operations is cash flow arising from operations generate revenue primarily of business.
- Cash flows from investing activities are cash flows from operations, procurement, construction, liquidation, sale of fixed assets, BĐSĐT, the other long-term assets, loans, investment into other units.
- Cash flows from financing activities are cash flows from operations to create the change in scale, the structure of equity and borrowed funds of the enterprise.
Can present cash flow in the manner most suitable to the characteristics of business.
The cash flow from the business activity, investment and finance to the following are reported on a net basis:
- Revenues and spending money the customer as rent collection, payment and return for property owners.
- Collect and spend money for the account with a quick spin, short maturing period.
Cash flows from transactions in foreign currency must be converted into the currency bookkeeping and financial reporting according to the prices of actual transactions at the time of the transaction.
Transactions on finance and investment does not directly use the money not be presented in the cash flow statement.
The item the money and end the influence of changes in exchange rates, currency conversion and cash equivalents in foreign currency there are end of the period must be presented of the indicators separately on the cash flow statement to reconcile the data with the item, respectively.
Business to present value and reasons of the funds are final balance, but not used due to the limitations of the law or other binding.
In case of corporate borrowers to pay straight for contractors who provide goods and services must still be presented on the statement of cash flows.
Business case arises account clearing with the same object, ways of reporting cash flows, cash flow, business adhere to the principle:
- The clearing related to the transactions are classified in the same cash flows are presented on a net basis.
- The clearing related to the transactions are classified in the cash flow different, it must not be presented on a net basis, which must be presented separately the value of each transaction.
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4. Requirements need to perform before reporting
Through the same point a number of requirements for how to report cash flow, cash flow exactly as prescribed. According to circular 133/2016/TT-BTC, specified the requirements for open and bookkeeping service reporting cash flows as follows:
- Ledger details, accounts receivable and payable, inventory must be followed in detail for each transaction to be able to present cash flow withdrawal or payment under 3 activity types: business, finance and investment.
- With respect to the ledger accounts detail reflects the right amount of details to keep track of cash flow, revenues and expenditures related to 3 types of activities: business, finance and investment.
- At the end of the accounting year, when reporting cash flows need to determine the short-term investments term recovery or maturity not exceeding 3 months from the date of purchase satisfying definitions are considered to be cash equivalents to exclude out of cash flows from investing activities. That value is located in the only goal of “Cash and cash equivalents end of period”.
5. How to report cash flow details 2022
Accnet introduce you two how to report cash flows: Establishment reported under the direct method and indirect consists of three parts:
- Flow from business operations
- Flow from investing activities
- Flow from financing activities
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5.1 reporting cash flows under the direct method
How to report cash flow, cash flow under the direct method is the guide establishment in the table below:
Note: the data in the indicators marked with (*) are scored by negative numbers in the form indicated in parentheses (...).
| Code | Indicators | How to set |
|
||
| 01 | Proceeds from the sale of goods, provide services and other sales | The total amount collected in the period include:
|
| 02 | Cash paid for the supply of goods and services (*) | The total amount paid in the period include:
|
| 03 | Cash paid to employees (*) | The total amount paid to the employee during the period of salary, wages, allowances, bonuses...that business has or advance payment. Data taken from the ledger of TK 111, 112 For applications with ledger TK 334 |
| 04 | Cash interest paid (*) | The total amount of interest paid in the period include:
|
| 05 | Corporate INCOME tax paid (*) | The total amount of corporate INCOME tax has filed for state in states, including:
|
| 06 | Cash from other business activities | Total collected money from the other account of business activity, in addition to the funds collected are reflected in Code no. 01 Data taken from the ledger of TK 111, 112 For application to the ledger, the TK 711, 133, 141, 138 and account other relevant |
| 07 | Cash paid for other business activities (*) | The total amount spent for the other account, in addition to the spending related to production activities business was reflected in Codes 02, 03, 04, 05 Data taken from the ledger of TK 111, 112 For applications with ledger s TK 811, 138, 333, 338, 352, 353, 356 and the account other relevant |
| 20 | Net cash flow from business operations | Code 20 = Code number 01 + Code no. 02 + Code no. 03 + Code no. 04 + Code 05 + Code number 06 + Code no. 07 If the data indicator is negative, it will be recorded in the form in brackets (...) |
|
||
| 21 | Money spent to shopping, construction of fixed assets, BĐSĐT and the other long-term assets (*) | The total amount was actually spent, including:
|
| 22 | The proceeds from the liquidation sale of fixed assets, BĐSĐT and the other long-term assets (*) | Net amount collected from the liquidation or sale of fixed assets tangible fixed assets intangible and BĐSĐT. Including the amount, recovery of debts receivable directly related to the liquidation, sale of fixed assets, BĐSĐT. The amount of money taken from the ledger of TK 111, 112 For application to the ledger, the TK 711, 5118, 131 (number of receivers), the TK 632, 811 (number of genera) |
| 23 | Money loan investment capital contribution to another unit (*) | The total amount was deposited into the bank with a maturity of over 3 months, the money was spent on the other side, loan, buy the company and cost investment capital contribution to other units Data taken from the ledger of TK 111, 112 For applications with ledger TK 128, 228, 331 |
| 24 | Money withdrawn for loans, investment capital contribution to other units | The total amount was collected as: Withdrawal of bank deposits having original maturity over 3 months; Money revoke the original loan, the original bonds; the Total amount was withdrawn from the sale or liquidation of the funds have invested in other units Data taken from the ledger of TK 111, 112 For applications with ledger TK 128, 228, 131 |
| 25 | Revenues loan interest, dividends and profits are divided | Amount earned on the account, interest on loans, interest on deposits, interest on bonds, dividends and profits received from the investment of capital into other units in the reporting period. Data taken from the ledger of TK 111, 112 For applications with ledger TK 515 |
| 30 | Net cash flow from investing activities | Code 30 = Code 21 + Code 22 + Code 23 + Code 24 + Code 25 If the data indicator is negative, it will be recorded in the form in brackets (...) |
|
||
| 31 | Proceeds from stock issuance, receipt of capital contribution of owner | The total amount was collected by the owners of the business capital contribution during the reporting period. For the corporation, this indicator reflects the amount was collected by issuing common stock by price actual release, including the proceeds from issuing preferred shares are classified as equity. Data taken from the ledger of TK 111, 112 For applications with ledger TK 411 |
| 32 | Pay back capital for the owner, buy back shares of the business was released (*) | The total amount paid by-refundable capital contribution for the owners of the business under the form of reimbursement in cash or buying back shares of the business was released to remove, or to use as stock funds Data taken from the ledger of TK 111, 112 For applications with ledger details the TK 411, 419 |
| 33 | Proceeds from borrowing | The total amount received in the states due to business borrowers, including issuance of bonds of financial institutions, credit and other objects in the reporting period Data taken from the ledger of TK 111, 112 For applications with ledger details the TK 3411, 4111 and the account other relevant |
| 34 | Money to pay the loan principal and principal financial leasing (*) | Total amount paid on account of the loan principal, preferred stock is classified as liabilities and the total amount paid on the principal debt finance lease during the reporting period Data taken from the ledger of TK 111, 112 For applications with ledger detail TK 341, 4111 |
| 35 | Dividends, profits were paid to the owner (*) | The total amount of dividends and profits paid to the owners of the business Data taken from the ledger of TK 111, 112 For application to the ledger, the TK 421, 338 |
| 40 | Net cash flow from financing activities | Code 40 = Code 31 + Code 32 + Code 33 + Code 34 + Code number 35 If the data indicator is negative, it will be recorded in the form in brackets (...) |
5.2 statements of cash flows indirect method
How to report cash flows under the indirect method as follows:
| Code | Indicators | How to set |
|
||
| 01 | Profit before tax | This norm is taken from the total accounting profit before tax (Code 50) on the reported results of business activities in the reporting period If this data is a negative number (in case of loss) shall be written in brackets (...) |
| 02 | Adjusted for the account | Code 02 = Code number 03 + Code no. 04 + Code 05 + Code number 06 + Code no. 07 + Code no. 08 |
| 03 | Depreciation of fixed assets and BĐSĐT | This indicator includes only some of the depreciation has been calculated on the reported results of operations, business Data taken from the ledger of TK 214 For application to the ledger, the TK 6427, 6414, 6424 |
| 04 | The reserves | Set aside, reversed, and use the reserves to the cash flows Data taken from the ledger of TK 129, 139, 159, 229 For application to the ledger, the TK 632, 635, 642 |
| 05 | Profit/loss exchange rate differences exchange due to revaluation of the item monetary assets and liabilities denominated in foreign currency | Reflect the profit or loss exchange rate differences exchange was reflected in profit before tax Data taken from the ledger TK 413 For application to the ledger, the TK 635, 515 |
| 06 | Profit/loss from investing activities | Total profit and loss incurred in the period was reflected in profit before tax but are classified as cash flows from investing activities include: (+) The gain or loss from the liquidation or sale of fixed assets, BĐSĐT, account losses BĐSĐT hold wait for price increase (+) The gain or loss from the revaluation of assets, non-monetary carried away contribution of capital, investment in other units (+) The gain or loss from the sale, withdrawal of financial investments (+) Account losses or income losses of investments held to maturity (+) Interest on loan, interest on deposits, dividends and profits are divided Data taken from the ledger of TK 515, 711, 632, 635, 811 and the account other relevant This data is minus (-) into data targets “profit before tax” if investment activity has net interest; be plus (+) on the norm of “profit before tax”, if investment activity has loss. |
| 07 | Interest expense | Interest expense was recorded in the report results of business activities in the reporting period. Based on the ledger TK 635 The data only goal is to data targets “profit before tax”. |
| 08 | The account, other adjustments | Number of set aside or reversed development Fund of science and technology
Data taken from the ledger TK 356
Note:
|
| 09 | Profit from business activities, before changes in working capital | Code no. 09 = 10-digit Code + Code number of 11 + Code 12 + Code 13 + 14-digit Code + Code 15 + Code 16 + Code 17 + Code number 18 |
| 10 | Increase and decrease accounts receivable | The sum of the difference between the closing balance and opening balance of the accounts receivable as: TK 131, 136, 138, 133, 141, 331
|
| 11 | Increase and decrease inventory (*) | The sum of the difference between the closing balance and opening balance of the account inventory
|
| 12 | Increase and decrease in accounts payable (excluding interest payable, INCOME tax payable) | The sum of the difference between the final balance to the beginning balance of the accounts payable as: TK 331, 333, 334, 335, 336, 338, 131
Note:
|
| 13 | Increase or decrease in prepaid expenses | The total difference between the closing balance and opening balance of TK 242 “prepaid Expenses” on the base were excluded account prepaid expenses related to cash flows from investing activities
Note:
|
| 14 | Increase or decrease in trading securities (*) | The total difference between the closing balance and opening balance of TK 121 “Stock trading”
Note:
|
| 15 | Cash interest paid (*) | The total amount of interest paid during the reporting period, including interest incurred in the period and pay this money accrued interest of the previous periods have paid in the states this rate, loan amount prepaid in any of this. Data taken from the ledger of TK 111, 112 Collated with the ledger TK 335, 635, 242, and the account is related to another. This data is minus (-) into data targets “business profit before changes in working capital” |
| 16 | Corporate INCOME tax paid (*) | The total amount of corporate INCOME tax has been submitted to the state include the amount of INCOME tax paid by states, the number of INCOME tax owed from the previous period was filed in this and the INCOME tax filing ago Data taken from the ledger of TK 111, 112 Collated with the ledger TK 3334 This data is minus (-) into data targets “business profit before changes in working capital” |
| 17 | Cash from other business activities | Is the account receipts from business activities in addition to the account stated in the Code number from 01 to 15. Data based on accounting the TK 111, 112 This data is plus (+) into data targets “profit from business activities, before changes in working capital” |
| 18 | Cash paid for other business activities | The funds other expenses from business activities in addition to the account stated in the Code number from 01 to 15. Data taken from the ledger of TK 111, 112 Data indicator this is minus (-) into data targets “profit from business activities, before changes in working capital” |
| 20 | Net cash flow from business operations | Code 20 = Code number 01 + Code no. 02 + Code no. 09 If the data indicator is negative, it will be recorded in the form in brackets (...) |
How to report cash flows indirect part II flow from investing activities, and III flow from financing activities the same with the method of reporting cash flows directly.
Reporting cash flows requires high accuracy and precision in keeping track of the cash flow from business operations, financial investment. Errors in reporting cash flow not only disrupt the management of cash flow, but also affect the assessment of the financial situation of the business. This can lead to strategic decisions deviations, even cause legal risk if the financial statements do not comply with regulations.
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