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Step 5: Unadjusted Balances - the Statement of Cash Flows

There are no adjustments in this statement as all transactions in this statement have a monetary value related to cash payments.

In the Exhibit below the entry for O1 is taken from the Worksheet for the Statement of Cash Flows in M1. The entry for transaction O1, initial provision of capital by the Owners, is an inflow of funds so it is an entry with a positive sign in the worksheet. By contrary an entry such as an expense which is an outflow of funds, will have a negative sign in the worksheet for the same statement.

This entry corresponds to a financing activity (FA) of the firm, namely, funds from the Owner to form the company and start operations. Different transactions will have different entries in this statement as shown in the Accounting System.



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