What you will learn to do: Prepare a Statement of Cash Flows

Accountants follow specific procedures when preparing a statement of cash flows. After determining the change in cash, the first step in preparing the statement of cash flows is to calculate the cash flows from operating activities, using either the direct or indirect method. The second step is to analyze all of the noncurrent accounts and additional data for changes resulting from investing and financing activities. The third step is to arrange the information gathered in steps 1 and 2 into the proper format for the statement of cash flows.

In this section, we’ll take the three parts of the Rumble Corp. statement of cash flows and put them together, and then we’ll review the systematic process that we accountants use to compile the statement.