WHAT IS A STATEMENT OF CASH FL
WHAT IS A STATEMENT OF CASH FLOWS? WHEN IS THE STATEMENTPREPARED? WHAT IS THE PURPOSE OF THE STATEMENT? NAME THREEACTIVITIES LISTED UNTER THE STATTEMENT. FOR EACH ACTIVITY, WRITEANY TWO CASH FLOWS THAT EITHER ARE ADDED OR SUBTRACTED. DETAILWHETHER IT IS AN ADDITION OR SUBTRACTION.
Answer:
A cash flow statement is a financial statement which providesfor how changes in financial statements bring about change inopening cash and cash equivalents in comparison with closing cashand cash equivalents by segregating inflow and outflow of cash intofollowing three activties, namely-
a) Cash from Operating activities
b) Cash from Investing activities
c) Cash from Financing activites
1. Cash from Operating activities – It can be arranged eitherthrough direct method or indirect method. Under direct method cashsales or collection from debtors is added and Cash purchases orpayment to creditors is subtracted. Under indirect method, increasein current liabilities is added and increase in current assets issubtracted.
2. Cash from Investing activities – Purchase of fixed assets issubtracted and sale of investments is added.
3. Cash from Financing Activities – Issue of securities is addedand redemption of securities is subtracted.
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