Example of Classifying Changes

 

•	In the Funds Statement example below, the cash account goes from $20,000 to $5,000. That is a decrease of $15,000. A decrease in an asset item is a source of funds.
•	Other changes would be classified accordingly.

 

Funds Statement - Step 1

 

Beginning Balance Sheet:
Cash	$20,000.00		Accounts Payable	$10,000.00
Mkt. Sec.	$10,000.00		Accruals	$4,000.00
Receivables	$50,000.00		Notes Payable	$24,000.00
Inventories	$70,000.00		Long-Term Debt	$96,000.00
Fixed Assets	$160,000.00		Common Stock	$64,000.00
			Retained Earnings	$112,000.00
Total Assets:	$310,000.00		Total Claims:	$310,000.00

 

Ending Balance Sheet:
Cash	$5,000.00		Accounts Payable	$10,000.00
Mkt. Sec.	$10,000.00		Accruals	$4,000.00
Receivables	$5,145.00		Notes Payable	$0.00
Inventories	$32,250.00		Long-Term Debt	$2,720.00
Fixed Assets	$172,000.00		Common Stock	$64,000.00
			Retained Earnings	$143,675.00
Total Assets:	$224,395.00		Total Claims:	$224,395.00