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How is a statement of cash flows related to other financial statements?

How is a statement of cash flows related to other financial statements?

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Expert Solution

Statement of Cash flow is linked to the Balance sheet

The cash balance in the Balance sheet is connected to the cash flow statement. The cash flow statement for the period explains the change in cash balance from opening of the period till closing of the period .The inflow and outflow of cash from each element of balance sheet is clearly disclosed in the cash flow statement.The cash flow statement is divided under three heads to incorpate all the elements of balance sheet. The divison of cash flow statement are as Operating , Investing and Financing activities.

Statement of Cash flow is linked to the Income Statement.

The cash flow from operating activities is linked with income statement.The net profit as determined in the income statement is taken as the base in cash flow under operating activities and after that adjustments made in order to arive at the cash flow from operating activity.

jeff jeffy answered 1 year ago
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