Question

Discuss the purposes of Statement of the Cash Flow, and what makes SCF different from other financial reports (e.g., Balance Sheet & Income Statement).

Answer 1

Cash flow statement is a statement which gives a detailed information and analysis related to the cash inflow and the cash outflow. Basically it provides a brief knowledge about the company's various areas from the cash is generated and areas at which this cash is used.

Basically SCF is divided into three parts i.e Operating activities which consist of all the cash flow transaction related to the operational activities of the business. Second is Investing activities which consist of the investment made by the business and assets sold by the company. Third is Financial activities which is related to the finance part from the where the money is raised or borrowed and any repayment of loan or any other Money borrowed.

SCF is different from the other financial statement because it is concerned and affected only from those transaction through which cash balance is affected. Like for example SCF is not affected by depreciation because it is a non cash activities.