What is the purpose of the statement of cash flows? List the three major categor

Question

1. What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.

What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category. What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category. What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.

Explanation / Answer

PURPOSE OF STATEMENT OF CASHFLOWS IS TO PROVIDE A SUMMARY OF CASH GENERATION i.e. CASH INFLOW AND CASH OUTFLOW DURING A GIVEN PERIOD OF TIME FOR WHICH THE CASHFLOW IS PREPARED..

MAJOR CATGORIES OF CASHFLOW ARE:-

CASH FLOW FROM OPERATING ACTIVITIES

EXAMPLE:-INCREASE OR DECREASE IN CURRENT ASSETS & LIAVBILITIES

CASH FLOW FROM FINANCING ACTIVITIES

EXAMPLE:-ANY PURCHASE OR SALE OF FIXED ASSETS OR INVESTMENTS

CASH FLOW FROM FINANCING ACTIVITIES

ANY ISSUE OF COMMON STOCK OR REPAYMENT OF LONG TERM DEBTS

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