Week 5 DQ - Week 5 DQ Answer each in 200 to 300 words In...

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Week 5 DQ Answer each in 200 to 300 words In what ways does the statement of cash flows relate to the balance sheet and income statement? Statements of cash flow are basically a derivative from income statement and the balance sheet. Statement basically shows how changes in balance sheet and income statement can affect cash. Basic purpose of cash flow is that it reports inflows and outflows of the cash and these outflow and inflows are only available from balance sheet and income statements. Net earnings calculated in income statement are straightly taken to the cash flow. Figures of tax and interest payments are taken from income statement and are reduced from cash flow statement and only that amount is deducted which is paid figure in income statement shows amount that is to be paid in full. Balance sheet also shows that how much inventory has increased if inventory is increasing it means that there has been an outflow of cash we can also see from balance sheet that if receivables have been decreased throughout the year it means
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This note was uploaded on 01/05/2012 for the course 101 melissa jo taught by Professor Acc101 during the Spring '11 term at Aarhus Universitet.

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Week 5 DQ - Week 5 DQ Answer each in 200 to 300 words In...

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