Cash Flow Statement Essay Sample - New York Essays.
The statement of cash flows form part of the financial statements submitted by a business. It depicts how cash flows in and out of the business or organization. It may either be issued via a monthly statement or annual statement. (A sample monthly cash flow statement can be seen above.).
A cash flow statement is a financial statement which includes data regarding all the inflows and outflows of an entity from its ongoing operations, during a certain period. Cash flow is actually the net amount of cash and cash equivalents that are moving in and out of a business.
For example, depreciation is accounted for during the cash flow statement, as it is not a true expense. When the profit figure, which is the starting point for the cash flow statements, is calculated, the depreciation is taken into account based on the depreciation policies being followed by the company.
However the following is a general cash flow format you can go by to generate your statement of cash flows. Your heading will specify the time period. For example, the heading may state ”For the Three Months Ended March 31, 20XX” or ”The Year Ended December 31, 200XX”. A statement of cash flows consists of three sections.
A cash flow statement, abbreviated as CFS, is one of the main financial statements out of three (the other two being the income statement and balance sheet) to gauge a business’s financial strength.When the cash flow is strong, it signifies that a company is in a good position to expand the business.
The objective of IAS 7 Statement of cash flows is to require the information about the historical changes in cash and cash equivalents of an entity. This information shall be provided in the statement of cash flows which classifies cash flows during the period from operating, investing and financing activities.
A cash flow statement tells you how much cash is entering and leaving your business. Along with balance sheets and income statements, it’s one of the three most important financial statements for managing your small business accounting and making sure you have enough cash to keep operating. First, let’s take a closer look at what cash flow statements do for your business, and why they.