Statement of Cash Flows Questions And Answers 2022/2023

Statement of Cash Flows - Answer - the statement of cash flows shows the changes in cash for the same period of time as that covered by the income statement. The cash flow statement shows all sources (i.e., receipts) of cash and all the users (i.e., payments) of cash it provides information about: cash receipts (inflows) cash payments (outflows) Categories of Cash Inflows and Outflows - Answer - Operating Activities Investing Activities Financing Activities The Cash Flow Statement helps users assess - Answer - 1. Ability to generate future cash flows 2. Ability to pay dividends and meet obligations 3. Why net income is different from operating cash flows 4. Cash investing and financing transactions Operating Activities - Answer - includes the cash inflows and outflows related to the normal course of business operations Operating Activities Cash Inflows - Answer - from sale of goods and services from return on loans (interest received) and equity securities (dividends received) Operating Activities Cash Outflows - Answer - to suppliers for inventory to employees for services to government for taxes to lenders for interest to others for expenses Investing Activities - Answer - includes the cash inflows and cash outflows related to the purchase and sale of long-term assets and investments long-term assets include PPE & Intangibles Investments represent both stock and bonds of other companies that we own as well as loans that we have made (i.e., lending money to customers) Investing Activities Cash Inflows - Answer - From the sale of property, plant and equipment from the sale