According to Chapter 16, how many sections the Statements of Cash Flows? Give a brief description...

According to Chapter 16, how many sections the Statements of Cash Flows? Give a brief description of these.

Expert Solution

There are basically 3 sections of Statement of Cash Flows. These are:
#1: Cash Flows from Operating Activities
--This section contains cash inflows and outflows that are related to general operations of business.
--Examples include cash paid to supplier, cash revenue earned, etc.
--This can be prepared by either direct or indirect method.

#2: Cash flows from Investing activities
--This section contains inflows and outflows of cash that are related to Investment activities.
--Investment activities included here are like equipment acquired for cash, investments sold, land sold.

#3: Cash flows from Financing activities
--These are mainly concerned with the Liabilities and equity side of balance sheet.
--Cash flows revolves around the funds acquired by the business and there repayments.
--Examples include Issue of stock, redemption/issue of Bonds, Dividend paid.

Note: There can be a 4^th section in certain cases which is termed as “non cash financing and iinvesting activities” which basically includes are investing and financing activities that did not involve inflow or outflow of cash.

ekkarill92 answered 1 month ago

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