Question
What is Cash Flow Statement? What are the objectives of preparing it?
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Answer
Cash Flow Statement is a statement that shows inflows (receipts) and outflows (payments) of Cash and Cash Equivalents of an enterprise during a specified period of time.
The objectives of Cash Flow Statement are:
The objectives of Cash Flow Statement are:
- To determine the sources (receipts) of Cash and Cash Equivalents under operating, investing and financing activities of the enterprise.
- To determine applications (payments) of Cash and Cash Equivalents under operating, investing and financing activities of the enterprise.
- To determine net change in Cash and Cash Equivalents being the difference between sources (receipts) and applications (payments) under operating, investing and financing activities between the dates of two Balance Sheets.
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Hints:
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