What does the statement of cash flows report? How does the statement of cash flows help users of...

Question:

What does the statement of cash flows report? How does the statement of cash flows help users of financial statements? Describe the three basic types of cash flow activities. What types of transactions are reported in the non-cash investing and financing activities section of the statement of cash flows?

Annual Report:

The annual report is a publication that is published by all public companies. In addition to providing an overview of the company's performance, it also provides investors with an update on three primary financial statements. They are the income statement, balance sheet, and cash flow statement.

Answer and Explanation:

What does the statement of the cash flows report?

The statement of cash flows provides investors with a report that gives an overview of the company's sources and uses of cash for operating expenses and payment of debts.

How does the statement of cash flows help users of financial statements?

The statement of cash flows acts as a bridge between the balance sheet and the income statement. It provides investors with transparency into both, because it only focuses on cash transactions.

Describe the three basic types of cash flow activities.

The three basic types of cash flow activities are cash flow from operations, cash flow from investments, and cash flow from financing.

What types of transactions are reported in the non-cash investing and financing activities section of the statement of cash flows?

Examples of transactions reported in the non-cash investing section are capital expenditures and purchases or sales of property, and plant and equipment. Examples of transactions reported in the non-cash financing section include dividend payments, stock buybacks, and stock issuance.


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Using the Statement of Cash Flows for Decision Making

from Accounting 101: Financial Accounting

Chapter 12 / Lesson 5
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