Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

Which of the following is true regarding the statement of cash flows?

It is prepared using only the accrual basis of accounting.

It excludes non-cash investing and financing activities from disclosure.

It only reports cash flows related to operating activities.

It reports cash inflows and outflows classified as operating, investing, and financing activities.

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Verified step by step guidance

Understand the purpose of the statement of cash flows: It provides information about a company's cash inflows and outflows during a specific period, categorized into operating, investing, and financing activities.

Clarify the three main categories: Operating activities include cash flows from the core business operations, investing activities involve cash flows from the purchase or sale of long-term assets, and financing activities include cash flows related to borrowing, repaying debt, or issuing equity.

Recognize that the statement of cash flows is not prepared using the accrual basis of accounting. Instead, it focuses on actual cash transactions, making it different from the income statement and balance sheet.

Note that non-cash investing and financing activities are disclosed separately in the notes to the financial statements or in a supplementary schedule, as they do not involve direct cash flows but are still important for understanding the company's financial position.

Conclude that the statement of cash flows reports cash inflows and outflows classified into operating, investing, and financing activities, providing a comprehensive view of the company's cash management.