Final answer:
To determine the net increase or decrease in cash with the Statement of Cash Flows (SOCF), compare the cash inflows and outflows from operating activities. If inflows exceed outflows, there is a net increase in cash, and vice versa.
Step-by-step explanation:
When analyzing the net increase or decrease in cash with the Statement of Cash Flows (SOCF), you need to focus on the operating activities section of the SOCF. This section includes cash flows from day-to-day business operations, such as revenue from sales and payments for expenses.
To prove the net increase or decrease in cash, you compare the cash inflows and outflows from operating activities. If the cash inflows are greater than the outflows, it indicates a net increase in cash. Conversely, if the outflows are greater than the inflows, it indicates a net decrease in cash.
For example, if a company receives $10,000 in cash from customers but pays $8,000 in cash for expenses, the net increase in cash would be $2,000.