What are the benefits of the statement of cash flows and what are the three categories...

What are the benefits of the statement of cash flows and what are the three categories in it? What are the other financial statements and what do they show?

NO HAND WRITTEN ANSWERS PLEASE

Expert Solution

Benefits of statement of cash flows

- It provides information regarding all cash inflows and outflows belonging to all sources.

- It is based on Cash accounting methods, so easier for non-accountants also to understand.

- It ensures timely investment and availability of cash for investment opportunities

-It helps management to make informed decisions about regular business operations, the capital budgeting as well as capital structure decisions.

- It assists in controlling unnecessary expenditures involved in form of interest, late payment penalties and debt costs.

Three categories of statement of cash flows

1. Operating Activities – this section of cash flow statement incudes revenue-generating activities of the business entity. All such transactions are included by which net profit or loss is determined.

2. Investing Activities – this section of cash flow statement includes activities involving the buying and selling of fixed assets as well as long term investments.

3. Financing Activities – this section of cash flow statement includes activities related to change in the size and the composition of owners’ capital or changes in debt.

Other financial statements :

Income statement : It shows the revenues and expenses of a firm during a particular period. It states the way revenues are transformed and results into the net income.

Balance sheet : It shows the assets, liabilities and owner's equity of a business at a particular date. It discloses the financial position of a business enterprise at a given date.

ekkarill92 answered 1 year ago

What are the three categories of cash flows on the cash flow statement?

What are the three categories used within the statement of cash flows? WHY are these categories...

What are the three categories used within the statement of cash flows? WHY are these categories important for understanding an organization's cash situation?

A statement of cash flows classifies cash receipts and cash payments into what three categories of...

A statement of cash flows classifies cash receipts and cash payments into what three categories of activity? For each category of activity, share two specific examples of both cash receipts and cash payments based on two different business scenarios of your choosing. The business scenarios you choose can be based on real or fictional companies. For example, if you chose Uber and the fictional MarksABunch Art Supplies company, you would share six examples of cash receipts and cash payments per...

Please also explain the three major categories of the statement of cash flows and under which...

Please also explain the three major categories of the statement of cash flows and under which category the following items belong. Also explain whether or not each item would be considered a source or use of cash for the period in question: Inventory-increased for period Net income-increased for period Accounts receivables increase for period Accounts payable decrease for period Accruals decrease for period Depreciation-increases for period Stock issued Property purchased Bonds paid off Inventories increase for period Cash decreases Notes...

Describe the benefits of the Statement of Cash Flows and whether you believe the Direct or...

Describe the benefits of the Statement of Cash Flows and whether you believe the Direct or Indirect Method is better for readers of the financial statements? Explain your response.

CASH FLOWS PROBLEM REQUIRED: Prepare the three sections of the statement of cash flows. Be certain...

CASH FLOWS PROBLEM REQUIRED: Prepare the three sections of the statement of cash flows. Be certain to label all numbers presented. The HUBB Corporation has the following information available from the 2020 Income Statement and the 2019 and 2020 comparative balance sheets: Sales $ 450,000 COGS - 220,000 GP 230,000 - Oper Exp - 130,000 - Interest Exp -10,000 + Gain on Sale + 2,000 - Taxes - 32,000 Net Income 60,000 2020 2019 Cash $49,000 $62,000 Acct Receivable 55,000...

what are the benefits of the statement of cash flow and income statement?

completion: understanding the three sections of the cash flows statement

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow...

Statement of Cash Flows The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that report the cash generated and spent during a specific period of time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business. Three Sections of the Statement of Cash Flows: Operating...

Alternative Treatments of Items of the Statement of Cash Flows The statement of cash flows is...

Alternative Treatments of Items of the Statement of Cash Flows The statement of cash flows is intended to provide information about the investing, financing, and operating activities of an enterprise during an accounting period. In a statement of cash flows, cash inflows and outflows for interest expense, interest revenue, and dividend revenue and payments to the government are considered operating activities. Required: a. Do you believe that cash inflows and outflows associated with nonoperating items, such as interest expense, interest...

Question