Video: Statement of Cash Flows: For-Profit and Non-For-Profit Objectives

In this lesson, take a deep dive into the mechanisms of crafting a statement of cash flows with Nick Palazzolo, CPA. Discover the ins and outs of using both direct and indirect methods, as well as the necessary disclosures needed from supporting documentation. Nick emphasizes the real-world application of these concepts, outlining the steps to prepare, adjust, and verify the statement of cash flows for accuracy by addressing identified errors and discrepancies. Further, he explains how to analyze the impact of various transactions within the categories of Operating, Investing, and Financing Activities. Get ready to gain a comprehensive understanding of one of the most critical financial statements and its profound role in the financial world.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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First, prepare a statement of cash flows. You probably would do that in the Statement of Cash Flows section, using the direct or indirect method and required disclosures from supporting documentation. They love saying "from supporting documentation" over and over. However, the only time you really ever do that is in The Sims. It's kind of more of a reference to the real world, where you will need to take all the client files or your own files if you're internally preparing it, and prep a statement of cash flows for your company, for your firm, whatever it is.

Secondly, we want to adjust a statement of cash flows to correct identified errors. Just like in many sections, you want to do it and you want to do it right. Sometimes you don't do it right. You want to go back and fix some of those errors. Next, we want to detect, investigate and correct discrepancies while agreeing the statement of cash flow amounts to supporting documentation.

Again, we want to make sure that the statement of cash flows is correct. We've got a lot of different things, such as the Investing, Operating, and Financing Activities sections. We'll dive into that pretty heavily. And lastly, derive the impact of transactions on the statement of cash flows. Pretty vague, but that's what the AICPA wants you to know.

That's what we're going to dive into much more in depth today, and I hope you all are going to enjoy this good time with the statement of cash flows.

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