What are the five steps for preparing the statement of cash flows? What is the purpose of each step?
What are the five steps for preparing the statement of cash flows? What is the purpose of each step?
Definition:
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and the result of these transactions is reported as ending balance of cash at the end of the reported period. The statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Operating activities include cash inflows and outflows from business operations. Investing activities include cash inflows and cash outflows from the purchase and sale of land or equipment, or investments. Financing activities include cash inflows and outflows from the issuance of common stock and debt, payment of debt, and dividends.
Step by step
Solved in 2 steps with 1 images
