Financial Reporting

AccountingAdvanced Level

10 flashcards

Card 1 of 1010%

Question

What is the purpose of the statement of cash flows?

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Answer

Definition

The statement of cash flows shows how cash moves in and out of a business over a specific period, highlighting operational, investing, and financing activities.

Example

A company reports $100,000 from operations, $50,000 spent on equipment, and $20,000 raised from new loans, giving a net cash flow of $30,000.

Quick Tip

Think of it as the cash heartbeat of the company.

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