This is Part 2 of a two-part series on Cash Flow vs. Earnings. Part II focuses on the impact on cash of the business operations, driven by operating expenses from the income statement, and changes in related accounts from the balance sheet.
The table below shows how operating expenses are transferred directly from the income statement to the Operating Activities table in the UCA Cash Flow statement. Changes in balance sheet accounts (such as Other Receivables, Accruals, etc.) are calculated and input in this section as well. As described earlier, decreases in asset accounts and increases in liability accounts are considered sources of cash (input as a positive number), while increases in asset accounts and decreases in liability accounts are considered uses of cash (input as a negative number).
