1. What are the similarities and differences between the balance sheet and the cash flow statement?

1. What are the similarities and differences between the balance sheet and the cash
flow statement?

Expert Solution

Solution:

Cash flow statement is an analytical statement prepared by the management accountant to study the impact of the business transactions of a particular period on the most liquid form of asset namely cash.

Where as Balance sheet is the summary of the financial items of a company (Assets and liabilities)

Similarities:

1) Both the statements helps in decision making and budget forcastings.

2) It ensures accuracy of data.

3) Preparation is difficult(Both cash flow and fund flow statements)

4) Both the statements ensures the liquid cash availability.

5) The repayment capacity can be understood by using cash flow as well as balancesheet.

6) Both the statement helps in short term financial decisions

ekkarill92 answered 1 year ago

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