information from which 3 sources are used to prepare the statement of cash flow?

Expert Solution

For preparing the statement of cash flows, the 3 sources' information is gathered from the comparative balance sheets of 2 years' i.e. current year and previous year, and income statement of current year for which statement of cash flows is being prepared.

The 3 sources in statement of cash flows are cash flows from operating, investing and financing activities.

For cash flows from operating activities, we take net income from the income statement and we adjust the net income for reconciling it with net cash provided by operations or operating activities from the expenses and incomes in income statement and working capital items from comparative balance sheets. We take the increase or decrease in current assets and current liabilities from previous year to current year from the comparative balance sheets.

For cash flows from investing activities, we take the investments made or sold by the company during the year by looking for the change in the amounts of non current assets from previous year to current year in the comparative balance sheet.

For cash flows from financing activities, we take the amounts of cash obtained or paid from equity and debt sources from the comparative balance sheet of 2 years' given.

ekkarill92 answered 1 year ago

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