Abstract This article presents a classroom-tested method for teaching the cash-flow statement that does not require a complex columnar worksheet. Through the use of this simple outline, a student can learn to prepare a cash-flow statement quickly, and the time which would have been spent discussing the worksheet can now be used in productively examining the analytical nature of the statement. An example of the relationship of non-cash expenses to cash flow completes the introduction to the cash flow from operations and, after a simple example of how changes in the remaining assets, liabilities, and owners' equity relate to cash flow, students are ready to use the outline mentioned in the article. Students are instructed to prepare the statement by following four steps. Step 1 is to compute the increase or decrease in cash. Students should complete the outline by first placing the changes in the Balance Sheet accounts in the proper section of the outline. Then the balances of the appropriate Income Statement accounts are entered in the outline.
Germain Boer (Sun,) studied this question.
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