1. Why is the Statement of Cash Flows needed?
Answer:- The statement of cash flows- The primary purpose of the statement of cash flows is to provide information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during the period Summarize the operating, investing, and financing activities of an entity.
The statement cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction. Each of these three classifications is defined as follows.
1)-Operating activities include cash activities related to net income. For example, cash generated from the sale of goods (revenue) and cash paid for merchandise (expense) are operating activities because revenues and expenses are included in net income.
2)-Investing activities include cash activities related to noncurrent assets. Noncurrent assets include (a) long-term investments; (b) property, plant, and equipment; and (c) the principal amount of loans made to other entities. For example, cash generated from the sale of land and cash paid for an investment in another company are included in this category. (Note that interest received from loans is included in operating activities.)
3)-Financing activities include cash activities related to noncurrent liabilities and owners’ equity. Noncurrent liabilities and owners’ equity items include (a) the principal amount of long-term debt, (b) stock sales and repurchases, and (c) dividend payments. (Note that interest paid on long-term debt is included in operating activities.)
Why is a statement of cash flows needed if we can see the balances at the beginning and end of the year by looking at the balance sheet?
Statement of Cash Flows • Why is the statement of cash flows a useful document? • What can creditors, investors, and other users learn from an analysis of the cash flow statement? • What are the advantages and disadvantage of having a large cash balance? • Using the same company that you chose in Week 3, analyze and report on the statement of cash flows. (Comment on operating, investing, and financing activities) Initial post due by Wednesday. [Remember to include...
Why is the statement of cash flows necessary? Because investors and managers wanted information on how much cash went up or down in a period Because investors and managers needed information on the net profit of a period Because investors and managers wanted additional information on why cash went up or down in a period Because the income statement is constructed using cash-basis accounting
31. Why is the statement of cash flows necessary? Because investors and managers wanted information on how much cash went up or down in a period Because investors and managers needed information on the net profit of a period Because investors and managers wanted additional information on why cash went up or down in a period Because the income statement is constructed using cash-basis accounting
1. Why was the statement of cash flows created by the Financial Accounting Standards Board (FASB)? 2. Describe the three classifications of cash flows, and provide examples of activities that would appear in each classification. 3. Which section of the statement of cash flows is widely regarded as the most important? Why? 4. Briefly describe the four steps required to prepare the statement of cash flows using the indirect method. 5. Refer to the Why is the indirect method used...
E 25 points maximum score Statement of Cash Flows • Why is the statement of cash flows a useful document? • What can creditors, investors, and other use learn from an analysis of the cash flow statement? • What are the advantages and disadvantage o having a large cash balance? • Using the same company that you chose in Week 3, analyze and report on the statement of cash flows. (Comment on operating, investing, and financing activities) Initial post due...
Why is the statement of cash flows a useful document? What can creditors, investors, and other users learn from an analysis of the cash flow statement? What are the advantages and disadvantage of having a large cash balance? Using the Apple company, analyze and report on the statement of cash flows. (Comment on operating, investing, and financing activities)
Agree or Disagree and Why? Learning objective: Explain the need for the statement of cash flows, and identify the three types of business activities presented in a statement of cash flows. The statement of cash flows is an important financial statement for a any business. Companies would want to know how the business is generating money. Tracking and recording transactions allows management to know how the cash is spent and where it comes from. In the statement of cash flows, all...
In the Statement of Cash Flows, why do we split out the operating, investing, and financing activities? Does the Statement of Cash Flow also recognize off-balance sheet assets and liabilities? Does any statement include it and should it?
Why and how is depreciation expense reported in a statement of cash flows prepared using the indirect method? Is this potentially confusing to the user of the financials?