Statement of Cash Flows Flashcards
What is a statement of cash flows?
They concentrate on the sources and uses of cash and are a useful indicator of liquidity.
What is cash?
Cash on hand and cash in the bank.
What are cash equivalents?
Short term, highly liquid investments that are readily convertible to known amounts of cash.
What are operating activities?
These are primarily derived from the principal revenue producing activities of the entity and other activities that are not financing or investment activities.
What are investing activities?
Cash flows from the acquisition and disposal of non-current assets and other investments not included in cash equivalents.
What are financing activities?
Activities that result in changes in the size and composition of the equity capital and borrowing of the entity.
What is an important saying to know when producing a statement of cash flows?
AIR (Assets Increase, Remove)
