Cash Flows

Operating Activities

Operating activities includes all cash receipts and cash payments associated with running/operation the business. 

Receipts from Customers

Consists of all cash revenue received from customers for the financial period including:

  • Cash sales

  • Receipts from debtors (Payments received from credit sales)

  • Unearned fees - even though this is a liability, this is still cash coming into the business from customers

  • Other income that is not a specific disclosure - eg comission income

Payments to Suppliers and Employees

Consists of all cash payments to employees (wages/salaries) and suppliers. Balance day adjustments may be required to find cash paid and not expense amount.

Payments to suppliers and employees can include:

  • Accounts payable (for inventory purchased on credit)

  • Prepaid Insurance

  • Prepaid Rent

  • Wages Paid (Deduct accrued wages)

  • Other expenses (Deduct book expenses)

Operating Activities - Specific Disclosures

The following are required by the AASB to be recorded in the statement of cash flows as a seperate entry and cannot be included in bundle categories like Receipts from Customers or Payments to Suppliers and Employees. 

  • Income tax paid

  • Dividends received

  • Interest received 

  • Interest paid