BUAD 803

BUAD 803: Principles of Accounting Registration Number: DP17MBA0967

The cash flow statement or the statement of cash flow is indispensible in business and a key accounting financial statement. In the cash flow statement sensitive information is shared to lenders, shareholders, debtors and other business associates. It also exposes the position and financial strength of a business. The cash flow statement, income statement and balance sheet are the three main financial statements. A cash flow statement relates monetary flow within an enterprise. These cash flow operations are divided into three, namely the operating activities, investing activities and financing activities. Operating activities consist of revenue generating activities in a company inclusive of the effects of cash transactions which determines net profit or loss. Investing activities involves asset related transactions like selling and acquisition of fixed assets in buildings or equipment’s including shares, as long as resale is excluded. Financing activities emphasize a shift or formation in the proprietor’s capital or credit consisting of contributions, distributions, purchase and stock issuance; and debt. The direct method or the indirect method may be utilized when preparing the statement of cash flow. The direct method is usually preferred by standard accounting bodies like the Financial Accounting Standards Board in America and the Nigeria Accounting Standard Board. Nevertheless, the indirect method is maintained by most companies for preparation of the cash flow statements, starting with the net income of the operating activities and adjustments for cash provision in the operating activities. The indispensability of the cash flow statement lies in the extent to which the company and its investors can deduce the discrepancies in the level of cash inflows and outflows from both internal and external sources. Though the income statement will show what is paid on a loan and the balance sheet shows what is owed, it is only the cash flow statement that signifies the cost of such loans. Sales and profit will be recorded by the income statement, but it is the cash flow statement that reveals weather sales generated are sufficient to meet expenditures. Partly the cash flow statement is important to the firm when prioritizing on the internal sources of cash as opposed to the external sources. The cash flow analyses and management serve multiple purposes of which the very significance is to give the proprietors and management an eye into the company’s financial status. Better informed decisions can be made with this knowledge in the daily operations of the company, in future investment needs, and capital required for debt or equity investors. Business of all sizes are challenged managing cash, while the cash flow statement is not the only method for cash flow monitoring, it forms a basic element in reporting statements and should not be overlooked by finance practitioners. Please find attached below the Cash Flow Statement.

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BUAD 803

BUAD 803: Principles of Accounting Registration Number: DP17MBA0967

The cash flow statement is a key accounting financial statement. In the cash flow statement sensitive information is shared to investors, shareholders, debtors and other business associates. The cash flow statement exposes the position and financial strength of a business. The cash flow statement, income statement and balance sheet are the three main financial statements. A cash flow statement relates monetary flow within an enterprise. These cash flow operations are divided into three, namely the operating activities, investing activities and financing activities. Operating activities consist of revenue generating activities inclusive of the effects of cash transactions on net profit or loss. Investing activities involves asset related transactions like selling and acquisition of fixed assets in buildings or equipment’s including shares. Financing activities display a shift or formation in owner’s capital or credit consisting of contributions, distributions, purchase and stock issuance; and debt. The direct method or the indirect method is used in preparing the statement of cash flow. The direct method is preferred by standard accounting bodies like the Financial Accounting Standards Board in America and the Nigeria Accounting Standard Board. Nevertheless, the indirect method is maintained by most companies in the preparation of cash flow statements, starting with the net income of the operating activities and adjustments for cash provision. The indispensability of the cash flow statement lies in the extent to which the company and its investors can deduce the discrepancies in the level of cash inflows and outflows from both internal and external sources. Though the income statement shows loan servicing activities and the balance sheet depicits debt, it is only the cash flow statement that highlights the cost of loans. Sales and profit are recorded in the income statement, but it is the cash flow statement which reveals if sales have generated sufficient funds to meet expenditures. Partly the cash flow statement is important to a business that prioritizes internal cash sources as opposed to the external sources. The cash flow analyses and management serve multiple purposes of which the very significance is to give the proprietors and management an eye into the company’s financial status. Better informed decisions can be made with this knowledge in the daily operations of the company, in future investment needs, and capital required for debt or equity investments. Business of all sizes face cash management issues, while the cash flow statement is not the only method for cash flow monitoring, it forms a basic element in reporting statements and should not be overlooked by financial managers. Please find attached below the Cash Flow Statement.

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BUAD 803

BUAD 803: Principles of Accounting Registration Number: DP17MBA0967

The cash flow statement is a key accounting financial statement. In the cash flow statement sensitive information is shared to investors, shareholders, debtors and other business associates. The cash flow statement exposes the position and financial strength of a business. The cash flow statement, income statement and balance sheet are the three main financial statements. A cash flow statement relates monetary flow within an enterprise. These cash flow operations are divided into three, namely the operating activities, investing activities and financing activities. Operating activities consist of revenue generating activities inclusive of the effects of cash transactions on net profit or loss. Investing activities involves asset related transactions like selling and acquisition of fixed assets in buildings or equipment’s including shares. Financing activities display a shift or formation in owner’s capital or credit consisting of contributions, distributions, purchase and stock issuance; and debt. The direct method or the indirect method is used in preparing the statement of cash flow. The direct method is preferred by standard accounting bodies like the Financial Accounting Standards Board in America and the Nigeria Accounting Standard Board. Nevertheless, the indirect method is maintained by most companies in the preparation of cash flow statements, starting with the net income of the operating activities and adjustments for cash provision. The indispensability of the cash flow statement lies in the extent to which the company and its investors can deduce the discrepancies in the level of cash inflows and outflows from both internal and external sources. Though the income statement shows loan servicing activities and the balance sheet depicits debt, it is only the cash flow statement that highlights the cost of loans. Sales and profit are recorded in the income statement, but it is the cash flow statement which reveals if sales have generated sufficient funds to meet expenditures. Partly the cash flow statement is important to a business that prioritizes internal cash sources as opposed to the external sources. The cash flow analyses and management serve multiple purposes of which the very significance is to give the proprietors and management an eye into the company’s financial status. Better informed decisions can be made with this knowledge in the daily operations of the company, in future investment needs, and capital required for debt or equity investments. Business of all sizes face cash management issues, while the cash flow statement is not the only method for cash flow monitoring, it forms a basic element in reporting statements and should not be overlooked by financial managers. Please find attached below the Cash Flow Statement.

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