Oct 7 - ORIE 3150 Notes for Chapter 11 TOPIC: Statement of...

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ORIE 3150 Notes for Chapter 11 TOPIC : Statement of Cash Flows 1. What is it? - Provides information about cash flows associated with the ________ of the business as well as the company’s _______ and ________ activities. - At any given point in time, company can be a net user or a net generator of cash. Some examples of a net user of cash include: o Investing in the business to significantly expand the operation o _______________ o _______________ 2. Why is it important? - An income statement provides information about revenue and expenses so why do I need the Statement of Cash Flows? Income reflected on the Income Statement bears no direct relationship to actual cash flows associated with the operations during that same period. This is because revenue is recorded when the activity (sale or service) is performed not when the cash is received compensating the entity for performing that sale/service and expenses are matched to revenue (this matching is referred to as _______ accounting method). - In addition to the accrual accounting “issue”, much judgment and subjectivity can be reflected in a company’s income statement and balance sheet. What are some examples of this judgment? o
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Oct 7 - ORIE 3150 Notes for Chapter 11 TOPIC: Statement of...

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