Section 1: 30–40%1A5
Statement of Cash Flows
Exam insight
The statement of cash flows shows up on every FAR sitting, so expect 3-4 questions. A common setup hands you a gain on an asset sale and asks where the cash goes. Plenty of candidates pick operating because the gain runs through net income. It isn't operating. The full proceeds go in investing, and you strip the gain out of operating entirely.
What AICPA wants you to know
- 1Classify transactions as operating, investing, or financing activities
- 2Prepare the operating section using both the indirect and direct methods
- 3Identify non-cash transactions that must be disclosed separately
- 4Calculate cash flows from investing and financing using balance sheet changes
- 5Distinguish between free cash flow and cash provided by operations
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.