Statement Of Cash Flow

Question 1

financial statement that answers the question “How did the company obtain and use cash during the period?”

Answer 1

Cash Flow Statement

Question 2

a financial statement that summarizes the movement of cash and cash equivalents (CCE) that come in and go out of a company. The ____ measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.

Answer 2

Cash Flow Statement

Question 3

include any sources and uses of cash from business activities. In other words, it reflects how much cash is generated from a company’s products or services.

These _____ might include:

Receipts from sales of goods and services
Interest payments
Income tax payments
Payments made to suppliers of goods and services used in production
Salary and wage payments to employees
Rent payments
Any other type of operating expenses

Answer 3

Operating Activities

Question 4

include any sources and uses of cash from a company’s investments. Purchases or sales of assets, loans made to vendors or received from customers, or any payments related to mergers and acquisitions (M&A) are included in this category.

Answer 4

Investing Activities

Question 5

includes the sources of cash from investors and banks, as well as the way cash is paid to shareholders. This includes any dividends, payments for stock repurchases, and repayment of debt principal (loans) that are made by the company.

Answer 5

Financing Activities

Question 6

adds up all of the cash payments and receipts, including cash paid to suppliers, cash receipts from customers, and cash paid out in salaries. This method of CFS is easier for very small businesses that use the cash basis accounting method.

These figures can also be calculated by using the beginning and ending balances of a variety of asset and liability accounts and examining the net decrease or increase in the accounts. It is presented in a straightforward manner.

Answer 6

Direct method

Question 7

cash flow is calculated by adjusting net income by adding or subtracting differences resulting from non-cash transactions. Non-cash items show up in the changes to a company’s assets and liabilities on the balance sheet from one period to the next. Therefore, the accountant will identify any increases and decreases to asset and liability accounts that need to be added back to or removed from the net income figure, in order to identify an accurate cash inflow or outflow.

Answer 7

Indirect method

Question 8

Using this method, actual cash inflows and outflows are known amounts. The cash flow statement is reported in a straightforward manner, using cash payments and receipts.

Answer 8

Direct method

Question 9

Using this method, actual cash inflows and outflows do not have to be known. The indirect method begins with net income or loss from the income statement, then modifies the figure using balance sheet account increases and decreases, to compute implicit cash inflows and outflows.

Answer 9

Indirect method