The Statement of Cashflow

The Statement of Cash Flow

The Statement of Cash Flow

Submitted to

Mohammed Sakhawat Hossain

Senior Lecturer

Daffodil International University

Submitted by

Ashiq Hossain I.D.083-11-558

Mohammad Belal Hossain I.D.082-11-260

Rakibul Hasan I.D.082-11-271

Date of Submission

April 23, 2009

…The Statement of Cash Flow…

Definition…

The statement of cash flows reports the cash receipts, cash payments and net change in cash resulting from operating, investing and financing activities during a period. It does so in a format that reconciles the beginning and ending cash balances.

Meaning of Cash Flows…

The term “cash” is used in this chapter includes cash and cash equivalent. Since cash and cash equivalents are viewed as the same, transfers between cash and cash equivalents are treated as cash receipts and cash payments. For this, such transfers are not reported in the statement of cash flows. The statement of cash flows is generally prepared using “cash and cash equivalents” as its basis.

Objective of the Statement of Cash Flows…

Primary Objective:

The primary purpose of the statement of cash flows is to provide information about an entity’s cash receipts and cash payments during a period.

Secondary Objective:

The secondary objective of the statement of cash flows is to provide information about its operating, investing and financing activities.

Usefulness of the Statement of Cash Flows…

The information of the statement of cash flows helps investors, creditors and others to assess the following aspects of a firm’s financial position. It helps…

▪ To generate future cash flows

▪ To pay dividends and meet obligations

▪ To make differences between net income and net cash provided (used) by operating activities

▪ To evaluate the cash investing and financing...