Statement of Cash Flows

Powerful Essays
Statement of Cash Flows

STATEMENT OF CASH FLOWS 1
The Statement of Cash Flows is a very viable and helpful resource. Decision makers use the Statement of Cash Flows in many instances to assess the viability of a firm. Within the statement are many types of elements that are incorporated to create the complete Statement of Cash Flows. Also within the statement is what is known as the inflows and outflows. In some cases, activity notes may be incorporated to help complete such representations. To fully understand the Statement of Cash Flows one must know the definition of it and what it in fact means. The Statement of Cash Flows is a change statement summarizing the transactions that caused cash to change during the period (Spiceland, 2007). In know this it is easier to understand why the Statement of Cash Flows and its purpose is to provide information about the cash receipts and cash disbursements of an enterprise that occurred during a period. Thus the statement will provide valuable information about the operating, investing, and financing activities that occurred during the period as well. Below is an example of a Statement of cash flows:
STATEMENT OF CASH FLOWS 2
Just like the balance sheet and income statement, the Cash Flow Statement, or CFS, is a mandatory part of a company's financial reports. Since 1987, the CFS has mandatorily recorded the amounts of cash and cash equivalents entering and leaving a company. The CFS is also a viable source as it allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent. It is these resources that allow decision makers to assess the viability of a firm.
Moving on to the elements of the Statement of Cash Flows there are several incorporated into the statement. Let’s start with the Structure of the CFS. First there is one important distinction with the CFS from the income statement and the



References: Cash Flow Statement. http://i.investopedia.com/inv/articles/site/Cash_Flow_Example.gif Heakal, Reem. What Is A Cash Flow Statement? 2010. http://www.investopedia.com/articles/04/033104.asp Spiceland, J. D., Sepe, J. F. & Tomassini, L. A. (2007). Intermediate accounting (4th ed.). New York, NY: McGraw-Hill Irwin.

You May Also Find These Documents Helpful

  • Better Essays

    Statement of Cash Flow

    • 1315 Words
    • 6 Pages

    Statement of Cash Flow Claudette Elliott, Lavern George, Tristan Hampton, Meagan Jones, dawn Prichard ACC/421 December 5, 2012 Paul Andoh Statement of Cash Flow The importance of cash the cash flow statement help businesses and creditors understand how liquid a company is. Team A discussed some important factors about the statement of cash flow. The purpose of the statement of cash flow and how it is used in accounting is explained. The direct and indirect method of preparing a statement…

    • 1315 Words
    • 6 Pages
    Better Essays
  • Good Essays

    Statement of Cash Flows

    • 868 Words
    • 4 Pages

    Statement of Cash Flows Larry D. Abernathy ACC 421/Intermediate Financial Accounting I Richard Burden Statement of Cash Flows The facts contained in the balance sheet and the profit and loss statement is connected by the bridge that is the statement of cash flows. By recording the flow of cash and cash equivalents into and out of the company the statement of cash flow is a good indicator of a company’s health. Thus, the purpose of the statement of cash flow…

    • 868 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Cash Flow Statement

    • 3707 Words
    • 15 Pages

    accounting, a cash flow statement, also known as statement of cash flows or funds flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of an enterprise during a period. Essentially, the cash flow statement is concerned…

    • 3707 Words
    • 15 Pages
    Powerful Essays
  • Good Essays

    Statement of Cash Flows

    • 725 Words
    • 3 Pages

    Statement of Cash Flows ACC 421: Intermediate Accounting I Instructor: Roger Beckstead Saturday, December 6, 2008 UOP In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows a company's incoming and outgoing money (sources and uses of cash) during a time period (often monthly or quarterly and also yearly). The statement shows how changes in balance sheet and income accounts affected cash and cash equivalents, and breaks the analysis…

    • 725 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Statement of Cash Flows

    • 847 Words
    • 4 Pages

    Technical Summary IAS 7 Statement of Cash Flows as issued at 1 January 2012. Includes IFRSs with an effective date after 1 January 2012 but not the IFRSs they will replace. This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity…

    • 847 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Statement of Cash Flows

    • 726 Words
    • 3 Pages

    RUNNING HEADER: STATEMENT OF CASHE FLOWS Statement of Cash Flows: Purpose and Contained Information Veronica Jackson University of Phoenix November 29, 2010 Statement of Cash Flows The statement of cash flows serves multiple purposes. One is providing information about a company’s cash payments and receipts during a given period. A second purpose is to provide cash-basis information about the company’s operating, financing, and investing activities. Its format reconciles the beginning…

    • 726 Words
    • 3 Pages
    Good Essays
  • Good Essays

    STATEMENT OF CASH FLOW

    • 431 Words
    • 2 Pages

    Statement of Cash Flows What is the purpose of the statement of cash flows? What information does it provide? Explain why statements of cash flows are important when assessing the financial strength of an organization. The following paper will discuss the purpose of the statements of cash flows and will analyze the importance of the information when assessing an organization’s financial strength. An organization needs to rely in different approaches to analyze performance and data to manage the…

    • 431 Words
    • 2 Pages
    Good Essays
  • Better Essays

    Statement of Cash Flow

    • 2304 Words
    • 10 Pages

    Statement of cash flows Cash is the blood of a business – it has to flow evenly. Holding plenty of cash is never a bad thing but there are exceptions to this as well. On the other hand, too much outflow in one area is the equivalent of getting shot and seeing blood pour out from the hole. The basic and key idea is that cash is what a company needs to be healthy and generate earnings. What Is Statement of Cash Flows? The Statement of Cash Flows (SCF) is distinct from the Statement of Comprehensive…

    • 2304 Words
    • 10 Pages
    Better Essays
  • Better Essays

    Cash Flow Statement

    • 2160 Words
    • 9 Pages

    changes in cash and cash equivalents of an entity by means of a statement of cash flows, which classifies cash flows during the period according to operating, investing, and financing activities. Fundamental principle in IAS 7 All entities that prepare financial statements in conformity with IFRSs are required to present a statement of cash flows. [IAS 7.1] The statement of cash flows analyses changes in cash and cash equivalents during a period. Cash and cash equivalents comprise cash on hand and…

    • 2160 Words
    • 9 Pages
    Better Essays
  • Good Essays

    Cash Flow Statement

    • 1049 Words
    • 5 Pages

    investment income in Co. Q’s income statement Cost or Equity Method APSE Rules If % > 25 and shares are Private (ie there is no quoted market values); you can use Cost OR Equity Method If % > 25 and shares are Public (ie there is no quoted market values); you can use Fair Value though Net Income Income OR Equity Method 2013-24, 2010-84, 2008-82, 2007.76. 2013M2-29 Goodwill (Don’t Use Calculation) "Goodwill= Cash Paid -FV of Net Assets (BV + FV adjustments)…

    • 1049 Words
    • 5 Pages
    Good Essays