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

The purpose of a statement of cash flows is to provide information about the:

cash receipts and cash payments of an entity during a period

profitability of an entity over a period

changes in equity of an entity during a period

financial position of an entity at a specific point in time

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Verified step by step guidance

Understand the purpose of the statement of cash flows: It is a financial statement that provides information about the cash inflows (receipts) and cash outflows (payments) of an entity during a specific period.

Recognize that the statement of cash flows focuses on cash transactions, not profitability, equity changes, or financial position. These aspects are covered by other financial statements such as the income statement, statement of changes in equity, and balance sheet respectively.

Identify the three main sections of the statement of cash flows: operating activities, investing activities, and financing activities. Each section categorizes cash flows based on their source or use.

Relate the statement of cash flows to decision-making: It helps stakeholders understand how the entity generates and uses cash, ensuring liquidity and solvency are maintained.

Conclude that the correct answer is 'cash receipts and cash payments of an entity during a period,' as this aligns with the primary purpose of the statement of cash flows.