In: Accounting
(i) segmental information
(ii) audit report
(iii) the accounting policies
(a) A cash flow statement provided information about the movement of cash in and out of the firm during the year. The same is divided into Operating, Investing and Financing activities.
Cash flow from Operating activities | ||
Net Income | xxx | |
Adjustment to reconcile net income: | ||
Add: Depreciation/ Loss on sale of any asset/ Amortization | xx | |
Less: Gain on sale of asset | (xx) | |
Add: Increase in current liabilities/ Decrease in current assets | xx | |
Less: Decrease in current liabilities/ Increase in current assets | (xx) | xx |
Net cash from Operating activities | xxx | |
Cash flow from Investing activities | ||
Purchase of long term assets for cash | (xx) | |
Sale of long term assets in exchange for cash | xx | xx |
Cash flow from financing activities | ||
Issuance of common stock for cash | xx | |
Cash dividend paid | (xx) | |
Repayment of long term notes | (xx) | |
Long term notes issued | xx | xx |
Net increase/decrease in cash and cash equivalents | xxx | |
Add: opening cash balance | xxx | |
Closing cash balance | xxx |
(b) The purpose of the cash flow statement is to show where an entities cash is being generated, and where its cash is being spent . It is important for analyzing the liquidity and long term solvency of a company. A cash flow report determines whether a business has enough cash to repay its approcahing liabilities.
(c)
(i) Segmental information: To help users of financial statements better understand and make more informed judgements about the enterprise as a whole
(ii) Audit report: To assess the entity's financial performance and financial position for any investment opportunity, whether the company has performed ethically during the year, and whether any material misstatement are presented in the financial statement, and to insure that the information provided is accurate and reliable.
(iii) Accounting policies: These are the specific policies and procedures that are used by a company to prepare its financial statement. It is important to enusre whether the policies followed are correct, whether they are accepted by law. We should also ensure whether these policies are properly carries forward from the last year, and if there is any change, such change should be properly reflected in the annual report