CHAPTER 11: STATEMENTS OF CASH FLOW

Transcription

1 Chapter 11: Statements of Cash Flow CHAPTER 11: STATEMENTS OF CASH FLOW Objectives Introduction The objectives are: Review the sample statement of cash flow report design Explore design details for a statement of cash flow Examine the effect of the calculation priority setting Complete a FASB style statement of cash flow using a combined link Together with income statements and balance sheets, the statement of cash flow is an integral component in the financial reporting package. The statement of cash flow typically starts with net income and then adds back amounts that do not affect cash outlay, such as depreciation expense. Next, all balance sheet accounts, such as accounts receivable and accounts payable, are added to the design as they are also related to changes in cash. Finally, starting cash balances are compared to ending cash balances. When a statement of cash flows is in balance, the net change in cash is equal to the line by line details total. In this part of the training, a sample cash flow report is reviewed. Additionally, it shows how to fine-tune a basic cash flow's design to accommodate the FASB style of reporting that breaks out activity in a single account, such as separating loan proceeds from loan payments. 11-1

2 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Sample Statement of Cash Flow Review the sample statement of cash flow design before fine-tuning the building blocks. Sample reports are defined in the Demo Reports building block group assigned to the Fabrikam, Inc. (FW) company. Generate the Sample Report The following steps guide you through the process of generating the sample statement of cash flow report. 1. On the Company menu, click the Companies menu item. 2. Click the Modify button. 3. Verify that the building block group is set to Demo Reports. 4. Click OK and Close to exit the Companies window. 5. If it is necessary, click Report Definitions on the navigation pane. 11-2

3 Chapter 11: Statements of Cash Flow 6. Double-click the CashFlow report. 7. Click Generate Report. FIGURE 11.1 SAMPLE STATEMENT OF CASH FLOW The sample report shows current period and year-to-date changes in cash. Notice that the Cash at Beginning of Period row displays the cash account balances as of April 1 in the April column, while cash as of January 1 is displayed in the Yearto-date column. Beginning cash is added to the Net Increase (Decrease) in Cash row to show Cash and Equivalents at End of Period. The check row for Ending Cash Per Books ties to the calculated Cash and Equivalents at End of Period row, so the report is in balance. After the user verifies that a report is in balance, the ending cash check total row is set to nonprinting status and a calculation row is added that will only print if there is a difference between calculated ending cash and ending cash, according to the general ledger. 11-3

4 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Export/Import the Cash Flow Building Blocks The following procedure shows how to export the sample cash flow building blocks and then import them into the training building block group, where they are fine-tuned and discussed in more detail. 1. Close the Report Viewer to return to Report Designer. 2. On the File menu, click Close All. 3. On the Company menu, click the Building Block Groups menu item. 4. Verify that Demo Reports is selected (the building block group that is active in the current company is selected by default) and then click Export. 5. Select the CashFlow report definition. Notice that the related row and column are also selected. 6. Click Export. 7. Type the file name "CashFlow" and then click Save. 8. Click the Training building block group and then click Import. 9. Click the CashFlow.tdbx file and then click Open. 10. Select the CashFlow report definition and then click Import. 11. Click Close. 12. On the Company menu, click the Companies menu item. 13. Verify that FW is selected and then click the Modify button. 14. Click the Building block group drop-down arrow and select Training. 11-4

5 Chapter 11: Statements of Cash Flow 15. Click OK. 16. Click Close. Notice that CashFlow is now listed in the report definitions. FIGURE 11.2 CASHFLOW EXPORT 11-5

6 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Review the Cash Flow Building Blocks The sample statement of cash flow gives students an example of how to design a similar report. This part of training shows how to open the row and column definition and explore their key components. The lesson also reviews the calculation priority setting in the report definition, an important factor in this report. FIGURE 11.3 CASHFLOW REPORT DEFINITION CashFlow Column Definition The following steps review in detail the column definition imported from the sample statement of cash flow. 1. Click Column Definitions in the navigation pane, and then doubleclick CashFlow. Notice that the design includes two nonprinting columns (NP in the Print Control field). These two year-to-date (YTD) financial data (FD) columns are the key to reporting on year-to-date changes in the cash flow report. Column C reads YTD/BB in the time range, so beginning-of-the-year balances are presented in that column, while column D reports year-to-date balances. The calculated difference between columns D and C is reported in column E. Column B is a periodic time range that reports the change in account balances for the period selected in the report. The wrap text (WT) print control is also displayed in all the columns; however, this setting is only affective in the description column. 1. In columns B through E, click the Print Control field and press the Delete key to clear the contents. 11-6

7 Chapter 11: Statements of Cash Flow 2. Save the changes to the column definition. NOTE: It is good report design practice to display all columns during the report design phase. NP can be noted in the column header as a reminder of columns that are hidden in the final presentation. FIGURE 11.4 CASHFLOW COLUMN DEFINITION CashFlow Row Definition The following steps review the cash flow row definition. 1. Click Row Definitions in the navigation pane. 2. Double-click CashFlow. The row definition shows the following design concepts: Net Income from Operations is reported on a single row summarizing all income and expense accounts. Notice that the row displays a C in the normal balance to present net income as a positive number. Items not affecting cash outlay are added back to net income to present Net Cash Flow from Operations. 11-7

8 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP The Sources (Uses) of Cash section displays balance sheet accounts that are not related to investing or financing activities. Notice that each row displays a C in the normal balance. Increases in assets, such as inventory, are presented as a use of cash. Decreases in liability accounts, such as accounts payable, are a use of cash. Decreases in asset accounts or increases in liability accounts are sources of cash. To accommodate the FASB style presentation, cash from investing or financing activities are defined in separate sections. Refer to FASB Style Statement of Cash Flow later in this training for additional FASB report design information. Related row codes are used in each of these sections to suppress display if the total row does not print. 11-8

9 Chapter 11: Statements of Cash Flow The total rows from each section of the design are combined on the Net Increase (Decrease) in Cash row. FIGURE 11.5 CASHFLOW ROW DEFINITION 11-9

10 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Beginning Cash in the Row Definition After the report calculates the net change in all accounts except cash, beginning cash is pulled into the report by using an account modifier. 1. Double-click row code 1270, column I. Notice that the account modifier /BB is assigned. The modifier is used to work in combination with the column definition to present beginning balances for each column in the design. The periodic column presents balances as of the beginning of the period. The YTD column presents balances as of the beginning of the year. 2. Click Cancel to close the Row Modifier dialog box. 3. Click column G and press the Delete key to clear the Non-Print option. As in the column definition, it is good practice to display nonprinting rows until the design is complete. 4. Click the Description field and press the F2 key. Type "NP" before the displayed text to help in the upcoming design analysis. Row code 1300 is the Cash at Beginning of Period row that prints in the completed design. The CAL formula uses specific column placement to define the display for the row. Column B displays the data from column B, row code 1270, while column E displays the data from column C, row code For the correct results to display in the completed report, this calculation must be performed after the column calculation. NOTE: If the statement of cash flow design contains only periodic columns, the NP row and related calculation is not required. Simply use the /BB modifier to display the beginning balance of the period. Ending Cash in the Row Definition The Cash and Equivalents at End of Period row in the completed design is a total of the Net Increase (Decrease) in Cash row, plus the Cash at Beginning of Period row. To verify that the calculated ending cash ties to the ending cash in the general ledger, cash accounts are pulled in a second time. The Ending Cash Per Books row uses a design concept similar to beginning cash, however, notice that a row modifier is not defined. This is because year-to-date cash the ending balance required on the row is already defined in column D of the column definition. 1. Click row code 1480, column G, and press the Delete key to clear the NP option. 2. Save the changes to the row definition. NOTE: If you are defining a statement of cash flow that contains only periodic columns, the /Y (year-to-date) account modifier is required on the Ending Cash Per Books row

11 Chapter 11: Statements of Cash Flow The Check Total row, which verifies ending cash, also uses a calculation formula with specific column placement. Notice that both columns B and E are equal to column D, row code After the report design is complete, the check total row is also set to non-print status. The final balance check for the report is the Calculated Ending Cash Out of Balance with GL row. This row compares the calculated ending cash to the general ledger ending cash. If there is a difference, the row displays to warn the user of the error. Generating the Statement of Cash Flow When a user designs a statement of cash flow that displays year-to-date changes in cash, he or she must set the calculation priority to calculate the row definition after the column definition. This training explores examples of each priority setting to show how the setting affects the intersection of row and column calculation formulas. FIGURE 11.6 CALCULATION PRIORITY CashFlow Report Definition The following steps review and update the CashFlow report definition. 1. Click Report Definitions in the navigation pane, and then doubleclick CashFlow. Notice that the Report tab displays the building blocks reviewed earlier. 2. Click the Output and Distribution tab. 3. Click the Report library location ellipsis button (...), expand the Library, and then click Cash Flow Statements. 4. Click OK

12 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP 5. Click the Settings tab. Notice that the calculation priority was changed from the default setting to Perform column calculations first and then row calculations. 6. Save the update to the report definition and then click Generate Report. Review the Calculation Results The following explains the activity that occurs in the columns and rows that are set to nonprinting in the completed design. 1. Double-click the Cash Flow Statements folder. 2. Double-click the CashFlow report. The following design concepts are examined: The second Year-to-date column displays the calculated difference between the first Year-to-date column and the Jan.1 Balance column. The NP-Cash at Beginning of Period row displays the period beginning balance in April, while both of the year-to-date columns (C and D) display beginning of the year balances. Notice that column E displays a blank (or zero if the report definition is updated to print zeros, not blanks). This zero presentation for the calculated year-todate change is the reason the Cash at Beginning of Period row is added to the design. The NP-Cash Ending Cash Per Books row does not contain an account modifier, so each column reports data based on its design: periodic, year-to-date beginning balance, and year-to-date. This row is referenced by the calculation formula on the Check Total-Ending Cash Per Books row

13 Chapter 11: Statements of Cash Flow Text in the description column wraps based on the default column width of 30 characters and the WT print control. FIGURE 11.7 CASH FLOW REPORT WITH EXPANDED DISPLAY Reverse the Calculation Priority If a user does not update a cash flow report definition from the default setting of Perform row calculation first and then column, the results displayed in the calculated year-to-date column are incorrect. To explore the results of changing the calculation priority, follow these steps: 1. Close the Report Viewer to return to the Report Designer. 2. Click the calculation priority, Perform row calculation first and then column option. 3. Save the change and then click Generate Report. 4. Expand the Cash Flow Statements folder and open the report

14 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP The Cash at Beginning of Period and Check Total - Ending Cash Per Books rows are both blank. The column calculation, which runs last in the current settings, presents the result of column D-C, or zero minus zero. The Calculated Ending Cash Out of Balance with GL row also displays an out of balance result because of the incorrect display on the NP - Ending Cash Per Books row and year-to-date column intersection. NOTE: The calculation priority setting only affects the intersection of column and row calculations. Complete the Cash Flow Design Complete the cash flow report in the following steps. 1. Close the Report Viewer to return to the Report Designer. 2. Click the calculation priority, Perform column calculation first and then row option. 3. Save the change to the report definition. 4. Click the Open Column Definition icon. 5. In column A, click the Column Width field, and then type "45". 6. In columns C and D, double-click the Print Control, select NP, and then click OK. 7. Save the change to the column definition. 8. Click the Open Report Definition icon. 9. Click the Open Row Definition icon. 10. On row codes 1270, 1480, and 1510, double-click the Print Control, select NP, and then click OK. 11. Save the changes to the row definition and then click the Open Report Definition icon. 12. Click Generate Report. Review the Completed Design Review the completed statement of cash flow in the following steps. 1. Double-click the Cash Flow Statements folder. 2. Double-click CashFlow to open the report. FASB Style Statement of Cash Flow In the FASB style statement of cash flow, asset purchases are broken out from asset disposals, and loan proceeds are broken out from repayments. Because these classifications are not typically broken out in the general ledger, a spreadsheet can detail the activity

15 Chapter 11: Statements of Cash Flow Users can design the spreadsheet in one of two ways. In the first design, users enter data for the period and then update it on a monthly basis. In the second design, users can maintain a trend of monthly activity. When maintaining trended activity, the user can design the spreadsheet with data down consecutive rows, as shown in the sample "CashFlow.xls" image, or place the data in consecutive columns. Management Reporter offers two methods for linking spreadsheet data into a report: the combined link method and the separate link method. The combined link method is explored in this part of training in the design of the FASB style statement of cash flow. For information about the separate linking method, refer to the Consolidated Reporting chapter of this training. FIGURE 11.8 CASHFLOW.XLS Combined Link Method The combined link method of adding external data to a report supplies users who have the following design considerations: Connect to a single Microsoft Office Excel spreadsheet The row definition supplies the spreadsheet file name and location Spreadsheet cell references are preceded The combined link method is primarily used to add spreadsheet data to a row in the report NOTE: Refer to the Consolidated Reporting part of training for information about the separate link method and adding columns of spreadsheet data

16 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP When the user defines the spreadsheet cell references, he or she must remember that the syntax depends on the spreadsheet's design. The user can hard-code rows to a specific cell in the spreadsheet or, if the spreadsheet is designed to report ongoing monthly activity, he or she can reference a starting or anchor point. This anchor point can be thought of as the zero period. The related period offset (/RPO or /CPO) code is then required to dynamically count down rows or across columns, based on the report's base period. The following examples relate to the "LinkingExample.xls" image. Hard-coded, updated each period B3 Periodic row example E2 /RPO Periodic column example A17 /CPO FIGURE 11.9 LINKING EXAMPLE.XLS Review the CashFlow Column Definition The column definition used in the current and year-to-date statement of cash flow is also used in the FASB style statement. To open the definition for a quick review, follow these steps: 1. Click Column Definitions in the navigation pane. 2. Double-click CashFlow to open the existing design. When the user defines a combined link in the row definition, the spreadsheet cell reference must define which column(s) in the column definition that the data is to 11-16

17 Chapter 11: Statements of Cash Flow appear in. However, spreadsheet data can only be placed in financial data (FD) or worksheet (WKS) type columns. NOTE: Worksheet type columns (WKS) are introduced in the Consolidated Reporting chapter of this training. Because column E (the printing year-to-date column) is a calculation type column, spreadsheet data cannot be placed directly in it. Instead, for this column design, the row definition references column D for the year-to-date spreadsheet data. The calculation formula in column E collects the data in column D, deducts zero (column C is blank), and presents the result. NOTE: Because column D displays year-to-date (YTD) results, it will also sum spreadsheet data through the reporting period when you are using either the /RPO or /CPO period offset codes. Define the Combined Link in the Row Definition The existing CashFlow row definition is used as a basis for the FASB style row definition. The following steps guide users through performing a Save As and modifying the design to incorporate a combined financial data and worksheet link. 1. Click Row Definitions in the navigation pane. 2. Double-click CashFlow. 3. On the File menu, click the Save As menu option. 4. Type the name "CashFlowFASB" and update the description to "Cash Flow Statement with combined link". Click OK. 5. Double-click the Link to Financial Dimensions header (column J) to open the Row Links dialog box. The current link name of GL1 and link type of Financial Dimensions display. 6. Click the Link type drop-down arrow and select Financial Dimensions + Worksheet. Notice the updated link name and link type. 7. In the Worksheet file path, type "CashFlow.xls". Users can also click the ellipsis button (...) to browse to the spreadsheet location. NOTE: If a specific path is not defined, the program automatically looks for spreadsheet files in the location defined in the Tools menu, under Options. However, files can be saved in any location that can be accessed during report generation

18 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP 8. Click OK. FIGURE FINANCIAL DATA SOURCE + WORKSHEET LINK TYPE Add Worksheet Cell References The following steps define rows that link to the spreadsheet. 1. Click row code 880, column F, and press the Delete key to clear the C in the normal balance of the Additions to Fixed Assets row. NOTE: C is used to flip the balance of general ledger data. When you are linking to external data, design the spreadsheet with the desired display: debit balances for cash sources and credit balances for cash uses. 2. Click the combined link column and delete the account code 15?0. In its place, type "@WKS(B=H4, D=H4) /RPO". The syntax tells Management Reporter to visit the worksheet defined in the row link and anchor to cell H4 in both the current and year-to-date columns. The /RPO offset code then counts down the rows from the anchor point or period zero. The number of rows down is determined by the base period defined in the report definition

19 Chapter 11: Statements of Cash Flow NOTE: Column I is included in the spreadsheet for informational purposes only. The YTD time range in the column definition summarizes spreadsheet data from the anchor point through the report date. 3. Click row code 910, and then click the Insert Row icon. o In the Description field of the new row, type "Disposal of Fixed Assets". o In column J, type "@WKS(B=K4, D=K4) /RPO". The next step is to complete the Cash Flow from Financing Activities section. In the basic cash flow design, the Other Liabilities row includes Notes Payable; in the FASB style, the spreadsheet provides detail about proceeds and repayments. 1. Click row code 610, column J, and delete account 2410 from the list of accounts. Accounts 2180 and 2500 remain. 2. Click row code 1060, and then click the Insert Row icon two times. 3. On the new rows, type the descriptions and worksheet syntax as shown in the following table. Description Proceeds from Notes Payable Repayments of Notes Payable Link to /RPO 4. On row code 1120, update the total Related Formula to "1045:1060". Add a Check Row In the following steps, a check row is added to verify the accounts that are described in the spreadsheet. Use this check row to verify that the general ledger balance ties to the spreadsheet details. 1. Click row code 1630 and type the description "Excel Check Rows". 2. Double-click the Format Code and select REM. Remarks are for user information only and do not appear in the completed report. 3. Click row code 1660 and type the description "NP - Fixed Assets". 4. Double-click the Print Control and then select NP. 5. In column J, type "15?0". 6. Click row code 1690 and type the description "NP - Notes Payable". 7. Double-click the Print Control and then select NP. 8. In column J, type "2410". 9. Click the down arrow on the keyboard to add a new row to the bottom of the row definition. Notice that row code 1720 is automatically assigned to the new row. 10. Type the description "Excel Detail Out of Balance". 11. In the Format Code, select TOT

20 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP 12. Type the Related Formula " ". 13. In the Print Control, select X0 to suppress the row if it displays zero. NOTE: By default, rows that add to zero do not print in the completed report, so the X0 option is not required. However, if the report definition settings include Display rows without amounts, then X0 overrides the setting for the row. 14. Save the completed row definition. FIGURE CASHFLOWFASB ROW DEFINITION 11-20

21 Chapter 11: Statements of Cash Flow Define the CashFlowFASB Report Definition Students define and generate the FASB style statement of cash flow in the following steps. 1. Click Report Definitions on the navigation pane. 2. Double-click CashFlow. 3. On the File menu, click the Save As menu item. 4. Type the name "CashFlowFASB" and the description "Statement of Cash Flow with Combined Link". Click OK. 5. Click the Row drop-down arrow and then select CashFlowFASB. 6. Click the Output and Distribution tab. 7. In Output name, type "CashFlow FASB". 8. Click the Settings tab to verify that the calculation priority reads Perform column calculation first and then row. 9. Save the report definition and then click Generate Report. Completed FASB Style Report To open the completed report in the Cash Flow Statements folder of the library, follow these steps: 1. Double-click the Cash Flow Statements folder

22 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP 2. Double-click CashFlow FASB to open the report. FIGURE STATEMENT OF CASH FLOW WITH EXCEL LINKING Notice that the activity contained in the spreadsheet is reported in the sections Cash Flow from Investing Activities and Cash Flow from Financing Activities. The Excel details are in balance with the general ledger accounts because the Excel Detail Out of Balance row adds to zero and therefore does not print

23 Chapter 11: Statements of Cash Flow Summary This part of the training introduced the task of designing two styles of cash flow reports: a basic design, where all data is pulled from the general ledger, and the FASB style, where account details are broken out in an Excel spreadsheet and then referenced using a combined link. In the combined link method, the row definition contains the name and path to the spreadsheet. This method of report design enables users to link to a single Excel worksheet. The link syntax allows a user to either hard-code a specific cell in the spreadsheet, or if the spreadsheet is designed with periodic data, defines an anchor point used with the period offset codes to dynamically count down rows, or across columns, based on the reporting period. The training also worked with adding nonprinting rows and columns. When users are reporting year-to-date changes in cash flow, two columns are nonprinting in the final design: beginning of the year balances and year-to-date balances. The difference in the beginning and year-to-date amounts displays in the report. In the row definition, nonprinting rows are also defined to work with beginning and ending cash balances. In the row definition calculation formula, specific column placement is used to print cash balances in the appropriate columns. Because the designs include intersecting row and column calculations, the calculation priority of columns first, then the rows are key to displaying the correct results. A thorough understanding of the concepts covered in this part of training is important when users are defining statement of cash flow reports

24 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Test Your Knowledge Test your knowledge with the following questions. 1. Which of the following is required when you are defining a year-to-date statement of cash flow? ( ) A single financial data column with a year-to-date time range ( ) Two financial data columns. One with a year-to-date time range, the other with a year-to-date beginning balance time frame ( ) A combined financial dimension + worksheet link in the row definition ( ) A calculation priority setting that performs the row calculation first 2. Which of the following is a true statement about period offset (/RPO or /CPO) codes? ( ) A code is a required component of the worksheet link syntax ( ) The code is entered first in the worksheet link ( ) The code is entered last in the worksheet link ( ) None of the above 3. Which of the following are true statements about a combined financial dimension + worksheet link in the row definition? (Select all that apply) ( ) The combined link connects to a single Excel worksheet ( ) Individual rows link to either financial dimension or worksheet data ( ) Cell references are preceded ( ) Cell references are either hard-coded or dynamic based on the report period 11-24

25 Quick Interaction: Lessons Learned Chapter 11: Statements of Cash Flow Take a moment and write down three key points you have learned from this chapter

26 Report Design in Management Reporter 2.0 for Microsoft Dynamics ERP Solutions Test Your Knowledge 1. Which of the following is required when you are defining a year-to-date statement of cash flow? ( ) A single financial data column with a year-to-date time range ( ) Two financial data columns. One with a year-to-date time range, the other with a year-to-date beginning balance time frame ( ) A combined financial dimension + worksheet link in the row definition ( ) A calculation priority setting that performs the row calculation first 2. Which of the following is a true statement about period offset (/RPO or /CPO) codes? ( ) A code is a required component of the worksheet link syntax ( ) The code is entered first in the worksheet link ( ) The code is entered last in the worksheet link ( ) None of the above 3. Which of the following are true statements about a combined financial dimension + worksheet link in the row definition? (Select all that apply) ( ) The combined link connects to a single Excel worksheet ( ) Individual rows link to either financial dimension or worksheet data ( ) Cell references are preceded ( ) Cell references are either hard-coded or dynamic based on the report period 11-26