Statement of Cash Flows

Statement of Cash Flows - A Statement of Cash Flows...

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Statement of Cash Flows  provides information about cash inflows and outflows  during an accounting period.  On the statement Cash Flows are segregated by: Operating Activities Investing Activities Financing Activities A positive net income figure on the income statement is ultimately insignificant unless a  company can translate its earnings into cash. Preparing a SCF The SCF requires reordering of the information presented on the balance sheet.  The B/S shows account balances at the end of an accounting period, and the SCF  shows changes in those same account balances between accounting periods.  It is called flows because it shows  changes over time rather than the absolute dollar   amount of the accounts at a point in time.  Changes that reflect cash inflow less the changes that result from cash outflows will  equal changes in the cash account.  The SCF is prepared by: Calculating the changes in all of the balance sheet accounts, including cash Then listing the changes in all of the accounts except cash as inflows or outflows And categorizing the flows by operating, financing, or investing activities Four parts of the SCF Cash Operating Activities Investing Activities Financing Activities
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Cash Includes cash and highly liquid short-term marketable securities, also called cash  equivalents.  Marketable securities are included as cash because they represent short-term highly 
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Statement of Cash Flows - A Statement of Cash Flows...

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