Step 1 Get Balance Sheet of atleast 2 years on Same Excel Sheet in Comparison format


  How to Make Cash Flow Statement - Cash Flow Statement


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Step 2 Calculate Sources and Uses of Cash

In Fund Flow, there were 4 heads

  1. Long Term Sources
  2. Long Term Uses
  3. Short Term Sources
  4. Short Term Uses

However in Cash Fow,there are only 2 heads

  1. Sources of Cash
  2. Uses of Cash

Hence, both Long Term and Short Term Sources are called Sources of Cash

Similarly, both Long Term and Short Term Uses are called Uses of Cash

Rules are Same as Fund Flow

How to Determine Sources and Uses of Cash?

Case m

Source/ Use

If Liability Increase


If Liability Decrease


If Assets Increase


If Assets Decrease



Check:- Ensure that Sources of Cash are equal to Uses of Cash


Step 3  Instead of Increase in Current Assets, Calculate Increase in Current Assets except Cash and Cash Equivalents

(Except Cash, Bank, FD)

Now Sources and Uses will not match

Also Calculate/Deficit Surplus of Cash (Sources-Uses of Cash)


Step 4 Add Opening Balance Of Cash and Cash Equivalents to Surplus to get Closing Balance of Cash


 If it is matching with Current year Cash,Bank,FD as shown in Balance Sheet, it means Cash Flow is Correctly prepared

  CFS4 NEW.png

Step 5 Note Following figures from Profit and Loss

  • Profit After Tax
  • Interest Expense
  • Interest Income
  • Tax Expense

And Calculate Operating Profit



In our case

  • Profit After Tax=2000
  • Interest Expense=500
  • Interest Income=100
  • Tax Expense=400

Operating Profit=Profit After Tax + Tax Expense + Interest Expense –Interest Income




Step 6 Replace Profit as Appearing in Cash Flow Statement with Operating Profit.

Also Show Interest Income as Source and Interest Expense and Tax as Use

There is no Net Effect of this in Cash Flow:-



Cash Flow Statement will appear like this


This is our Final Cash Flow Statement

  1. Accounts and Finance
  2. Step 6 Fund Flow and Cash Flow

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.