1. Is the cash flow statement prepared using accrual accounting or cash accounting? 2. What information...

1. Is the cash flow statement prepared using accrual accounting or cash accounting?

2. What information is included on the cash flow statement that is not included on the income statement or balance sheet?

Expert Solution

1. Cash flow statement is prepared using cash accounting.

2. The cash flow statement is details of cash used or generated from operating, financing and investing activities over a specific period of time. It is similar to income statement but is does not account for accrued items, which are reported in income statement. Information which is included on the cash flow statement that is not recorded on the income statement or balance sheet are as follows:

(i) Cash receipt from customers and cash paid to suppliers are not shown in balance sheet but it is shown in the cash flow statement.

(ii) Proceeds from sale of any asset is not shown in the balance sheet or income statement saperately but it is shown in the cash flow statement.

(iii) Cash flow statement shows actual cash used or generated from the activities (i.e., operating, financing and investing activities)

ekkarill92 answered 2 years ago

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