Financial Accounting
Financial Accounting
4th Edition
ISBN: 9780134125053
Author: Kemp, Robert S., Waybright, Jeffrey.
Publisher: Pearson Education,
Question
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Chapter 11, Problem 1DQ
To determine

Explain the reasons why a statement of cash flows are important to users of financial statements.

Expert Solution & Answer
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Explanation of Solution

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

  • The statement of cash flows provides awareness to the sources and uses of cash.
  • The users named the cash as the lifeblood of the business.
  • The user assumes that if cash is used in the business operations than it generated and liquidating its investments in assets to ensure the company to be out of debt.
  • Therefore, the statements of cash flows are important to the financial statement users.

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Chapter 11 Solutions

Financial Accounting

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