![]() ![]() Breakout between the two methods are as follows: The main difference between the two methods is their presentation. Both methods result in an ending cash balance which ties to the balance sheet. The cash flow statement can be presented in two ways: the direct and indirect methods. If you have questions related to balances or system generated/limited use object codes, please contact your (RC) fiscal officer or campus office. It is key to highlight that some object codes within the range may not be available for departments to use because they are either system generated or are limited to use by either the campus, Treasury or the Controller’s Office. Since it includes object codes from both a balance sheet and an income statement, object codes range from 0001 – 9999. The cash flow statement is comprised of the cash activity in a given period from both the balance sheet and the income statement. How is the Cash Flow Statement Organized? Low cash flow results in a higher borrowing rate which has a negative and costly impact for IU. Cash flow is the main factor that impacts the interest rate paid on IU debt. See Financial Ratios document for more details. Allows users to calculate common benchmark ratios such as: liquidity ratio, etc.Show the impact on cash flow from changes in asset, liabilities and equity.Understand the entity’s inflows and outflows of cash.Identify why there is a lack of cash within an entity – typically lack of cash is due to capital purchasing.Other common uses of a cash flow statement include: While it has many similarities to the balance sheet, the cash flow statement is focused solely on the movement of cash and excludes almost all non-cash or non-cash equivalent activity. The main purpose of the cash flow statement is to explain the change in cash and cash equivalents. For more information regarding the two types of accounting, please see the Accruals section. The cash flow statement complements the other financial statements by providing the cash position of an entity so internal and external users can review its overall financial health and position. While this is beneficial in helping to access the revenue stream, expense categories and overall profitability for a given period, it does make it more difficult to highlight an entity’s cash position. Indiana University is required to use the accrual method as opposed to the cash basis method of accounting. Similar to the income statement, the cash flow statement is presented for an entire period, typically a fiscal year. It is one of the three main financial statements, along with the income statement and balance sheet, and reflects the change in cash within an entity by operating activities, investing activities and financing activities. The cash flow statement, also known as Statement of Cash Flows, is a financial statement that summarizes the amount of cash and cash equivalent entering and leaving an entity. Introduction What is a Cash Flow Statement? For further information on how to pull the income statement or any of the referenced reports in the Requirements and Best Practices section, refer to the Financial Statement Reports instructions. Information presented below will walk through a general understanding of the cash flow statement along with presentation requirements specifically related to IU reporting and lastly will specify requirements and best practices for users of the financial statements. This section discusses the cash flow statement and how it is used internally within Indiana University. Financial Statements – Income Statement Section.Financial Statements – Balance Sheet Section.Chart of Accounts and General Ledger Section.Prior to reading the standard Financial Statements - Cash Flow Statement, it is beneficial to review the below sections to gain foundational information: The following information is related to Indiana University functions solely and is not applicable for Indiana University Foundation.
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