What is the reporting purpose of the Statement of Cash Flows? Identify at least two questions...

Question:

What is the reporting purpose of the Statement of Cash Flows? Identify at least two questions that this statement can answer.

Annual Report:

Annual report is a term used in business. It refers to the annual publication that all public companies are required to make available for their investors. Every annual report has at least three financial statements: the balance sheet, the income statement and the cash flow statement.

Answer and Explanation:

What is the reporting purpose of the Statement of Cash Flows?

The reporting purpose of the statement of cash flows is to provide an overview of the firm's sources and uses of cash.

Identify at least two questions that this statement can answer.

The cash flow statement can answer the following questions:

1) What's the difference between the cash earned by the company's operations and net income?

2) How does the company finance itself?

3) How much did the company spend on capital expenditures?


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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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