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WHAT IS A STATEMENT OF CASH FLOWS? WHEN IS THE STATEMENT PREPARED? WHAT IS THE PURPOSE...

WHAT IS A STATEMENT OF CASH FLOWS? WHEN IS THE STATEMENT PREPARED? WHAT IS THE PURPOSE OF THE STATEMENT? NAME THREE ACTIVITIES LISTED UNTER THE STATTEMENT. FOR EACH ACTIVITY, WRITE ANY TWO CASH FLOWS THAT EITHER ARE ADDED OR SUBTRACTED. DETAIL WHETHER IT IS AN ADDITION OR SUBTRACTION.

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A cash flow statement is a financial statement which provides for how changes in financial statements bring about change in opening cash and cash equivalents in comparison with closing cash and cash equivalents by segregating inflow and outflow of cash into following three activties, namely-

a) Cash from Operating activities

b) Cash from Investing activities

c) Cash from Financing activites

1. Cash from Operating activities - It can be arranged either through direct method or indirect method. Under direct method cash sales or collection from debtors is added and Cash purchases or payment to creditors is subtracted. Under indirect method, increase in current liabilities is added and increase in current assets is subtracted.

2. Cash from Investing activities - Purchase of fixed assets is subtracted and sale of investments is added.

3. Cash from Financing Activities - Issue of securities is added and redemption of securities is subtracted.

ekkarill92 answered 2 years ago
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