Can you summarize how to do a statement of cash flow?

I'm taking an accounting class, and sitll can't figure out a good way to memorize all the details of making a statement of cash flow. Anyone have any hint how to do it the most easily?

Can you summarize how to do a statement of cash flow?
For the indirect method:


OPERATING ACTIVITIES


1. Start with net income. Then add depreciation expense, add (subtract) losses (gains) on the disposition of fixed assets, investment losses (gains), amortization of intangibles, and cumulative effect of change in accounting principle. These charges (credits) must be added (subtracted) because they are non-cash in nature.





2. Then, look at the balance sheet and add (subtract)decreases (increases) in operating assets (e.g. accounts receivable, inventory, prepayments) for the period. For example, if prepaid insurance increases by $1,000, add $1,000 to the operating activities section. This must be done because the balance of the account increased (i.e. cash outflow) but this has not yet been reflected in net income. Next, add (subtract) increases (decreases) in operating liabilities (e.g. accounts payable, accrued expenses, taxes accrued, salaries payable).





Note: The investing activites and financing activites section are the same under both the direct and indirect methods. The indirect method only applies to the operating activites section.





INVESTING ACTIVITES





1. Analyze the activity in the fixed asset and investment accounts. Determine the amount of cash paid for capital expenditures and purchases of investments classified as held-to-maturity or available for sale (Note that purchases and sales of trading securities are considered operating activities. The change in balance of trading securities assets should be included in the operating activites section.).





2. Determine the amount of cash received for sales of fixed assets or investments. Report this amount as a cash inflow.





3. For steps 2 and 3, merely taking the change in balance of the fixed asset and investment accounts will not work. You must analyze the activity in the accounts.





4. Also include in this section cash paid to acquire companies. The amount of cash outflow reported should be net of cash received in the acquisition. Conversely, include cash received from the sale of subsidiaries in this section. Note that when there is an acquistion or divestiture, the change in the operating assets and liabilties on the balance sheet will not match the change reported in the operating activites section of the statement of cash flows because the amounts shown in the operating activites section do not include the change in the asset or liability due to the acquisition or divestiture.





FINANCING ACTIVITES





1. Determine the change in short-term debt. If short-term debt increased during the period, report a cash inflow. If it decreased, report a cash outflow. This amount may be reported as a net number if the maturities of the short-term debt do not exceed 90 days. Otherwise, the gross amounts must be reported.





2. Determine the amount of long-term debt issued. Show this amount as a cash inflow. Determine the amount long-term debt repaid/retired. Show this amount as a cash outflow.





3. Do not show interest paid in this section. All interest paid is an operating activity.





4. Determine the amount of dividends paid during the period. Show this amount as a cash outflow. Note that dividends received are not a financing cash flow and should be reported as operating activities.





5. Determine the amount of cash received for the issuance of stock. Report this amount as a cash inflow. Report repurchases of common stock separately in this section as a cash outflow.





6. If there were any debt issue costs incurred (underwriting fees, bond discount), they should be reported as a cash outflow in this section.





7. If there were excess tax benefits from share-based payment arrangements credited to paid-in capital, these amounts would also be reported as financing cash inflow.





GOOD LUCK!!!! Post additional questions if you need help.
Reply:I assume you are using the indirect method:





1. Always start with depreciation expense, and/or gains and losses. (Add depreciation and losses, deduct gains from net income).





2. Next analyze all the changes in current assets and liabilities. For assets, deduct increases and add decreases. Vice versa for liabilities.





- these 2 steps should conclude the operating activities section. That's really the hardest part I think.

medicine