Question

Cash and its' use in any organization is critical to overall business success. As you are creating these statements of cash flow, are there different needs that you, as an accountant, need to be aware of?

Answer 1

The primary purpose of a statement of cash flow is to provide information about the cash receipts and cash payments of the entity and how they relate to the entities: > ► > Operating activities, Investing, and Financing activities Stakeholders of financial statements use this information to evaluate the liquidity of the entity and to evaluate its ability to generate positive cash flows in future periods, pay dividend, and finance growth. Following are the Different needs of the statement of cash flows as given below: The Entity/Business's ability to generate positive cash flows in future periods. The Entity/company's ability to meet its obligation and to pay dividends. Reasons for Differences between the amount of net income and the related net cash flows from operating activities. Both the cash and noncash aspects of the company's investment and financing transactions for the period. Causes of the change in the amount of cash and cash equivalent between the beginning and the end of the accounting period.