Cash Flow Statement

Week 5 Individual Paper Cash Flow Statement

Sancy Acevedo

University of Phoenix

ACC 421

November 13, 2010

Financial Statements is prepared to help the stakeholders like investors, lenders, and management so that they can evaluate the performance of the organization. . Cash flow statement is one of the main financial statements. It provides information regarding cash inflows and outflows of the organization. Moreover they further show the cash flow of position of the organization activities into three key activities:

1. Operating activities

2. Financing activities

3. Investing activities

As a result they are required to supply information about the cash provided or used by each of the three activities. The Operating Activities includes the entire operations of the business. It helps in determining the cash result of transactions that generate revenues and expenses and enter into determination of net earnings. It helps in determining the cash effects of investing activities that is the impact of purchasing and disposing of investments and productive long-lived assets using cash and lending money, and collecting the loans. Also it helps in deliberate the impact of financing activities that is the obtaining cash from issuing debt and repaying the amounts borrowed and obtaining cash from shareholders and paying them dividends.

The cash flow statement records the cash and cash equivalent coming into and moving out the company. The reason of the cash flow statement is to give the entry of cash balance that is given in the balance sheet. The statement of cash flows is the connection between the details of the profit and loss account and the balance sheet. The cash flow statement helps fill the breach in information between in the financial statements of a company.

The purpose of the cash flows from financing activities gives the reader the cash flows from investing, borrowing, cash withdrawals by owners and changes in stock levels. In detail the cash in...