Why should interested parties thoroughly review an organization’s financial statements? Next, address the following questions: Why...

Why should interested parties thoroughly review an organization’s financial statements? Next, address the following questions:

Why might the excess of revenues over expenses be of particular interest to a financial statement user, rather than the increase in net assets without donor restrictions?
What does the statement of cash flows tell us that looking at the change in cash on the balance sheet does not?
Should each of the sections of the cash flow statement show an increase in cash for a healthy organization?

Expert Solution

interested parties should be reviewing the financial statement of the organisation because it will be providing with the reflection of the weakness and the strength of the company and it will also offer with an estimation about the future performance of the company in terms of the quantitative analysis and it will also perform an analysis for the futuristic association of the company for the stakeholders so these financial statements will be having different type of statements like balance sheet income statements along with cash flow statements so they will be offering with the different quantitative element of company which will be helpful in decision making.

Increase in in revenues over expense will be more important because it will be leading to increase the profits of the company.

Statement of the cash flows will be detailing about the cash inflows and outflows as well as the cash generating ability of the company in the long run and balance it will just offering with the closing as well as and it does not offer with the detailed case statements.cash flow statement will provide with detail of the liquidity associated with the organisation.

it is not important that each of the segment of the cash flow should be showing positive balance but rather the net cash flows should be positive and that would be reflecting the liquidity of the company because the company will be making various expenditure on capital expenditure front and they will be need cash outflows for that & it could be beneficial also.

jeff jeffy answered 2 years ago

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