Question

Since most companies use accrual based accounting, what is the purpose of the cash flow statement to a company's decision makers? Give a real life example.

Answer 1

Ans Carh Flocw Staement identiAes me eath inElous cash eauivadents duning and ouselaus os specified accounting peniod eash ard According o the Accrualconcapt, tnansection ane reconded nevenue is reconded nepnd to e date of receipt Similanly eupenses Oxre reconded when hey ane incurned withoutegand regard to hhe date of payment Hence, ban calh and onedit thansaclons ane neconded as ren acrual concept at tha ime of occurance That means when it is eanned wihout As anesul he details of he annount af cash Teceived andeald duning an accountngpeniad ane. not shown in the balance shlat on statement of shaneholdens eauity This infermaton is disclosed income stasement on me stasement of Cash Flous Cashelow stauement eplains why the cash balanse at he frem tmat at the beginnine of ne period descnibing the ond finanding acivie end of accounting peniod is different हिव investing entenpnise's openatin Cashflow infonmation is usefu to management Punchesing aquipment when makina decisions Such as . Plant empansien Yee kirding de claxing dividend Maintaining dad dauy arenes fayment of cwo nin canital la uyback of shanas Aedempion of Pnefenned Stock ete longtenm debt

A Prajected Cashlow statement can be me futone cash position of Pcepared to Khow a concertn a irm Coill be genercated into4ne firrm cash cull be needed byprupaning is starement Come to Knowehow much cas and how muh Ao make various payments can
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