Under the direct method, the whole working paper is vertically divided into three sections:
The first paragraph is the balance sheet item, which is divided into debit item and credit item.
The second paragraph is the income statement item;
The third paragraph is the cash flow statement item.
The working papers are horizontally divided into five columns, in the balance sheet section:
The first column is the item column, which lists the names of items in the balance sheet;
The second column is the opening number, which is used to fill in the opening number of balance sheet items;
The third column is the debit of the adjustment entry;
The fourth column is the credit of the adjustment entry; The fifth column is the ending number, which is used to fill in the ending number of each item in the balance sheet.
In the income statement and cash flow statement:
The first column is also the item column, which is used to fill in the item names of the income statement and cash flow statement;
The second column is vacant and not filled;
The third and fourth columns are the debit and credit of the adjustment entry respectively;
The fifth column is the number of the current period. The figures in the income statement should be checked with those in the current period, and the figures in the cash flow statement can be directly used to prepare a formal cash flow statement.
The procedure of preparing cash flow statement by working paper method is as follows:
Step 1: Enter the opening and closing numbers of the balance sheet into the opening and closing columns of the working draft.
The second step is to analyze the current business and make adjustment entries. Adjustment entries generally have the following categories:
The first category involves income, cost and expense items in the income statement and assets, liabilities and owners' equity items in the balance sheet. Through adjustment, the income and expenses under the accrual basis are converted into cash basis;
The second category involves investment and financing projects in the balance sheet and cash flow statement, reflecting the cash flow of investment and financing activities;
The third category involves investment and financing projects in the income statement and cash flow statement, aiming to include the income and expenses related to investment and financing in the income statement into the cash flow of investment and financing in the cash flow statement. In addition, there are some adjustment entries that do not involve cash receipts and payments, but only to check the ending and opening changes of balance sheet items.
In the adjustment entries, cash and cash equivalents are not directly debited or credited, but are recorded in the relevant items of "cash flow from operating activities", "cash flow from investment activities" and "cash flow from financing activities" respectively. Debit indicates cash inflow and credit indicates cash outflow.
The third step is to enter the adjustment entries into the corresponding parts of the working paper.
The fourth step is to check the adjustment entries. The total amount of loans and borrowings should be equal, and the opening amount of balance sheet items should be equal to the ending amount after adding and subtracting the amount of loans and borrowings in the adjustment entries.
The fifth step is to prepare a formal cash flow statement according to the cash flow statement items in the working paper.
2. T-shaped account method adopts the T-shaped account method, that is, based on the income statement and balance sheet data, each item is analyzed and adjusted entries are compiled, so as to prepare the cash flow statement.
The procedure of compiling cash flow statement by T-account method is as follows:
The first step is to open T-shaped accounts for all non-cash items (including balance sheet items and income statement items), and transfer their respective period-end and opening changes into each account.
The second step is to open a large "cash and cash equivalents" T-shaped account, each side is divided into three parts: business activities, investment activities and fund-raising activities, with cash inflows recorded on the left and cash outflows recorded on the right. Like other accounts, the number of changes at the end of the period and the beginning of the period.
The third step is to analyze the increase and decrease of each non-cash item based on the income statement items and the balance sheet, and make adjustment entries accordingly.
The fourth step is to post the adjustment entries into each T-shaped account and check it. The balance of the account after the debit and credit offset should be consistent with the original ending and opening changes.
The fifth step is to prepare a formal cash flow statement according to the large "cash and cash equivalents" T-shaped account.
Cash flow statement is a financial statement that reflects the influence of business activities, investment activities and financing activities on cash and cash equivalents in a certain period (such as monthly, quarterly or annual).
The third step is to analyze the increase and decrease of each non-cash item based on the income statement items and the balance sheet, and make adjustment entries accordingly.
To sum up, make an electronic cash flow statement first, and then fill it in the electronic tax bureau report.