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Accounting For Fun and Profit by Lawrence A. Weiss

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APPENDIX 11A

Another Way to Create Cash Flow Statements (A Simple Debit and Credit Approach)

If you are comfortable with debits and credits, the Cash Flow Statement can be prepared by creating T accounts for all Balance Sheet items and adjusting all changes to the cash account.5 This is done by creating a large T account for cash divided into three sections (Operations, Investing, and Financing) and smaller T accounts for everything else. Then, for each change (debit or credit) required to adjust each account (other than cash) from its opening to closing balance, a corresponding opposite change (credit or debit) is made into the large cash T account. Let us do this for our example above.

For each small T account below, the opening and closing ...

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