The Statement of Cash Flows (SCF) for CPA FAR categorizes cash movements into Operating, Investing, and Financing activities, reconciling beginning and ending cash. It commonly uses the indirect method (starting with Net Income) for operations, requiring adjustments for non-cash items (depreciation) and working capital changes.  Key FAR Exam Focus Areas: Operating Activities: Starts with Net Income. Add back non-cash expenses (depreciation, amortization) and losses; deduct gains. Working Capital: Increases in current assets (e.g., A/R) = decrease cash; Increases in current liabilities... Show more

The Statement of Cash Flows (SCF) for CPA FAR categorizes cash movements into Operating, Investing, and Financing activities, reconciling beginning and ending cash. It commonly uses the indirect method (starting with Net Income) for operations, requiring adjustments for non-cash items (depreciation) and working capital changes. 

Key FAR Exam Focus Areas:
Operating Activities: Starts with Net Income. Add back non-cash expenses (depreciation, amortization) and losses; deduct gains.
Working Capital: Increases in current assets (e.g., A/R) = decrease cash; Increases in current liabilities (e.g., A/P) = increase cash.
Investing Activities: Changes in non-current assets (Purchase/sale of PPE, trading/available-for-sale securities, business acquisitions).
Financing Activities: Changes in non-current liabilities and equity (Issuing stock, paying dividends, borrowing/repaying debt).
Direct vs. Indirect: While indirect is common, understand the direct method (cash received from customers, cash paid to suppliers).
Non-Cash Transactions: Investing/financing activities that do not impact cash (e.g., buying a building with a mortgage) must be disclosed separately. 

Key Tips:
Interest paid and taxes paid are Operating activities under US GAAP.
Dividends paid are Financing; dividends received are Operating.
Master the T-account method to reconstruct cash transactions for simulations.

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