Great Purpose Of Preparing Cash Flow Statement

Give the meaning of Cash Equivalents for the purpose of preparing Cash Flow Statement.

Purpose of preparing cash flow statement. For purposes of preparing the statement of cash flow cash is defined as including both cash and chequivalents TRUE FALSE 2. Cash Equivalents are short-term highly liquid investments that can be readily convertible into cash and are subject to an insignificant risk of change in value. There are two approaches utilized to prepare the statement of cash flow.

Definition Explanation and Purpose of Preparing Statement of Cash Flows. The cash flow statements are categorized in three different activit. These inflows and outflows are further classified into operating investing and financing activities.

They are held for the purpose of meeting short-term cash commitments. The statement of cash flows presents the sources and uses of cash. Purpose of making the cash flow statement is to provide the information about organizations gross receipts and payments for the annual year to make an informed business decision.

Purpose of the Cash Flow Statement. The purpose of the cash flow statement is to show where an entities cash is being generated cash inflows and where its cash is being spent cash outflows over a specific period of time usually quarterly and annually. The primary purpose of the statement of cash flows is to provide information about a companys cash receipts and cash payments during an.

Statement of Cash Flows The statement showing the cash used or generated by different business organizations from different activities in a particular accounting period is the statement of cash. The major cash flows are presented in one of these classifications. Cast equivalents means short term highly liquid investments that are readily convertible into known amount of cash which are subject to an in significant risk of changes in value.

The purpose of the cash flow statement or statement of cash flows or SCF is to identify the major cash flows occurring during the same period of time as the companys income statement and between the related balance sheets. CBSE Delhi 2019 Answer. Preparation of a cash flow statement serves various purposes like stating the cash movements with respect to cash inflows and outflows the performance of strategic decisions taken by the management and provides relevant information about the financial well-being of an organization so that its liquidity status can be derived and projected to the readers of its financial statements.