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The purpose of a Statement of Cash Flows is to report all major cash receipts (inflows) and cash payments

(outflows) during a period. . It answers important questions such as:

1. How does a company obtain its cash?

2. Where does a company spend its cash?

3. What explains the change in the cash balance?

4. How much is paid in cash dividends?

This report classifies cash flows into different activities and reports net cash flow for each activity in the body of the Statement of Cash Flows.

What is the main purpose or the reason for the business managers to use the different cash flow activities details and summaries produced from all this activity?

Top Answer

A company obtains cash from operations of the business, issuing stocks, and obtaining loans. A company will spend their cash... View the full answer

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