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 Table of contents
Identify proof of transactions that can be considered valid in business
dealings.

Prepare the statement of cash flows.

Ensure that the cash inflows and outflows matches the total balance left.

Recognize the signatories needed to have the financial report approved.

Apply the proper format when constructing a financial report.

Objective 1:
Identify proof of transactions that can be considered valid in
business dealings.

Every taxpayer engaged in trade or business are required to issue BIR registered
Sales Invoice and Official Receipt for each sale of goods or services.
The issuance of BIR Sales Invoice and/or Official Receipts will:
1. Save you from paying penalties and
2. Increase your sales by attracting companies to buy in bulk from you

1
Invoices and/or Receipts are classified into two. These are:
1. Principal Invoices/Receipts
2. Supplementary Invoices/Receipt
In financial reports, only principal invoices or receipts are considered valid and are
accepted.

PRINCIPAL Receipt Invoice includes:

1. Sales Invoices,
2. Official Receipts
3.
What is the Difference between Sales Invoice and Official Receipt?

1. Sales Invoice: good as Official Receipt. It is used for sale of goods and/or
properties.
Examples of business that issue Sales Invoice are Food Kiosk (Take-Out) and
Retail stores like hardware and drugstores.

2. Official Receipt: used for sale of service and/or leasing of properties.

Examples of business that issue Official Receipt are Restaurants (Dine-in) and
Professionals like accountants, doctors, lawyers, and graphic artist.

Sample of Official Receipt

Cashier’s
Vat Reg. TIN
Signature

Payer’s
Business Name Information

Date of
Vat Reg. TIN
Issuance
Purchase Date of
Issuance

Payer’s
Information

2
Payment
Cashier’s
Information
Signature
 Issuer of Receipt
Form

Business Address
Header

Subtotal,
Taxes, Total

Sample of Sales Invoice

3
 Business Name

Business
Address

Unique
Identifier

Purchase

Subtotal,
Taxes,
Total

Transaction
Record

Date of
Issuance
Name: ______________________________ Date: ________
Year and Section: _____________________ Score: _____/21

4
Identify the parts asked and write your answer on the space provided.
A. Sales Invoice:

1. _________________________
2. _________________________
3. _________________________
4. _________________________
B. Official Receipt:
5. _________________________
6. _________________________
7. ________________________

5
 1

2
3

4 5

6
7

10
9

11

1. _________________________
2. _________________________
3. _________________________
4. _________________________
5. _________________________
6. _________________________
7. _________________________
8. _________________________
9. _________________________
10. _________________________
11. _________________________

Questions:
1. What parts of an official receipt are not present in a sales invoice?

6
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
2. Among those differences, which one do you think is the reason why it is an official
receipt that is accepted in a financial report? Why do you think so?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
3. Between a sales invoice and an official receipt, which do you think is a Sales of
Goods and which is a Sales of Service?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

7
 Objective 2
Prepare the statement of cash flows.

What is the Statement of Cash Flows?

The Statement of Cash Flows (also referred to as the cash flow statement) is one of
the three key financial statements that reports the cash generated and spent during a
specific period of time (i.e., a month, quarter, or year). The statement of cash flows
acts as a bridge between the income statement and balance sheet by showing how
money moved in and out of the organization.

Three sections of the Statement of Cash Flows:

1. Operating Activities: The principal revenue-generating activities of an
organization and other activities that are not investing or financing; any cash
flows from current assets and current liabilities
 2. Investing Activities: Any cash flows from the acquisition and disposal of long-
term assets and other investments not included in cash equivalents
3. Financing Activities: Any cash flows that result in changes in the size and
composition of the contributed equity or borrowings of the entity (i.e., bonds,
stock, cash dividends)

Cash flow definitions:

Cash flows: Inflows and outflows of cash and cash equivalents
Cash: Cash on hand and demand deposits (cash balance on the balance sheet)

Name: ______________________________ Date: ________

Year and Section: _____________________ Score: _____/16

Student Activity:
Create an organized ledger using the given receipt.

____________________

____________________ ____________________ ____________

____________________ ____________________ ____________

____________________ ____________________ ____________

____________________ ____________________ ____________

____________________ ____________________ ____________

 Objective 3
Ensure that the cash inflows and outflows matches the total
balance left.

Breakdown of Activities
Operating activities are normal and core activities within a business that generate
cash inflows and outflows. They include the following:
 Total sales of goods and services collected during a period
 Payments made to suppliers of goods and services used in production settled
during a period
 Payments to employees or other expenses made during a period
Cash flow from operating activities excludes money that is spent on capital
expenditures, cash directed to long-term investments and any cash received from the
sale of long-term assets.
 Financing activities consist of activities that will alter the equity or borrowings of
an organization

Calculating Cash Flow

To see the importance of changes in operating cash flows, it’s important to
understand how cash flow is calculated. Two methods are used to calculate cash flow
from operating activities: indirect and direct, which both produce the same result.
1. Direct Method: This method draws data from the income statement using
cash receipts and cash disbursements from operating activities.
2. Indirect Method: This method starts with net income and converts it to
OCF by adjusting for items that were used to calculate net income but did
not affect cash.

Direct Versus Indirect Method

The direct method adds up all the various types of cash payments and
receipts, including cash paid to suppliers, cash receipts from customers and cash paid
out in salaries. These figures are calculated by using the beginning and end balances
of a variety of a business accounts and examining the net decrease or increase of the
account.
In contrast, under the indirect method, cash flow from operating activities is
calculated by first taking the net income off of an organization’s income statement.
The direct method for calculating a company's cash flow from operating
activities is a more straightforward approach in that it reveals a company's operating
cash receipts and payments, but is more challenging to prepare since the information
is difficult to assemble. Still, whether you use the direct or indirect method for
calculating cash from operations, the same result will be produced.
 Name: ______________________________ Date: ________
Year and Section: _____________________ Score: _____/24
Fill in the blanks using the sample receipts provided.

Less Expenses:
I. Christmas Party
1. ___________________ 2. _________________________________ 3. ______________
4. ___________________ 5. _________________________________ 6. ______________
7. ___________________ 8. _________________________________ 9. ______________
10. ___________________ 11. _________________________________ 12. ______________
13. ___________________ 14. _________________________________ 15. ______________
16. ___________________ 17. _________________________________ 18. ______________
19. ______________
II. Delivery
20. ___________________ 21. _________________________________ 22. ______________
23. ______________
Total Expenses: 24. ______________
 Figure 1

Objective 4
Recognize the signatories needed to have a financial report
approved.

Certified Financial Statement

A certified financial statement is a financial document, such as an income
statement, cash flow statement or balance sheet that has been audited and signed
off on by an accountant. Once an auditor has fully reviewed the details of a financial
statement and is confident the numbers reported within it are accurate, they certify
the documents. Certified financial statements are an important part of the checks
and balances system of financial reporting.
So then, who are the signatories needed to have a financial report approved and
validated?
1. Treasurer: the one who handles the funds of an organization. Automatically,
this means that he or she is also the one who has to prepare the financial
 report given that he or she is the one who knows the cash inflows and
outflows in the organization.
2. Auditor: the one who is trained to review and verify that the accounting data
provided by an audited organization accurately corresponds to the activities
that have been partaken. The auditor has to write a report at the conclusion of
the audit which determines the level of accuracy and clarity that the
organization has accounted for.
3. President of Organization: the one who must sign the financial report to verify
that he or she was aware that the transactions included in the report are
correct.
4. Finance Officer: the last one to sign because he has the final authority whether
he will consider the report valid or not. The finance officer will check all the
transactions and see if it matches the receipts given and see if the amounts
tally
5. Authorized Person: If the organization has remaining funds before the
validation of the financial report, the report must include the total amount of
money on hand. The treasurer must then indicate the name of the person who
holds the money and have them sign on the financial report. This is to verify
that the indicated person does have the money; at the same time, this will
hold that person responsible should the money be used in matters outside the
organization.

Objective 5
Apply the proper format in constructing a financial report

Financial Reports

Financial reports or financial statements are written records that convey the
financial activities and conditions of a business or entity and consist of four major
components. Financial statements are meant to present the financial information of
the entity in question as clearly and concisely as possible for both the entity and for
readers. Financial statements for businesses usually include income statements,
balance sheets, statements of retained earnings and cash flows but may also require
additional detailed disclosures depending on the relevant accounting framework.
Financial statements are often audited by government agencies, accountants, firms,
etc. to ensure accuracy and for tax, financing or investing purposes.
What must a Financial Report include?
1. Balance sheet: It presents a company's financial position at the end of a
specified date. Some describe the balance sheet as a "snapshot" of the
company's financial position at a point (a moment or an instant) in time.
2. Cash flow statement: It shows how much cash is generated and used during a
given time period. It is one of the main financial statements analysts use in
building a three statement model.
The main categories found in a cash flow statement are the:
 operating activities
 investing activities
 financing activities of a company
3. Statement of changes in equity: It is a reconciliation of the beginning and
ending balances in a company’s equity during a reporting period. It is not
considered an essential part of the monthly financial statements, and so is the
most likely of all the financial statements not to be issued. However, it is a
common part of the annual financial statements.

Sample format of a Financial Report

Logo of
company/
Republic of the Philippines Logo of
Organization/
university
NAME OF COMPANY/UNIVERSITY Office

Address

Name of Organization/ Office

FINANCIAL REPORT
Prepared by: Balance- Care of:

PRINTED NAME WITH SIGNATURE PRINTED NAME WITH SIGNATURE

Auditor Authorized Person

PRINTED NAME WITH SIGNATURE

Treasurer

PRINTED NAME WITH SIGNATURE

Head/ President of Office/ Organization

Approved by:
 PRINTED NAME WITH SIGNATURE
Finance Officer

Name: ______________________________ Date: ________

Year and Section: _____________________ Score: _____/34
Create an organized financial report using the given receipts

Republic of the Philippines

1. ________________________
City of Malolos, Bulacan
2. _______________________________

FINANCIAL REPORT
Cash Inflow:
Balance (As of 3. ________________) 4. ____________
Less Expenses:
III. Christmas Party
5. _________________ 6. _______________________________ 7. ____________
 8. _________________ 9. _______________________________ 10. ____________
12. _________________ 13. _______________________________ 14. ____________
15. _________________ 16. _______________________________ 17. ____________
18. _________________ 19. _______________________________ 20. ____________
21. _________________ 22. _______________________________ 23. ____________
IV. Delivery
24. _________________ 25. _______________________________ 26. ____________

TOTAL EXPENSES 27. _____________

BALANCE (As of 28. ________________) 29. _____________

Prepared by: Balance- Care of:

John Smith Jeremy Walker

30. _______________________ 31. _______________________

Jane Doe
32. _______________________

June Miller
33. _______________________

Approved by:

Julie Hart
34. _______________________
.
Conclusion:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________