Summary
Chapter 11: Statement of Cash Flow Summary
- Course
- Rsm219
- Institution
- University Of Toronto (U Of T )
Chapter 11: Statement of Cash Flow Summary
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Chapter 11 -Statement of Cash flow
Role of the Statement of Cash flow
Purpose of Cash flow:
·
Provides information about
-> Cash Inflows (cash receipts)
Cash outflows (cash
payment)
->
representation of
company liquidity.
->
Cash flow displays how how cash used
company generances cash,
and uses much or
received.
Business Activities
Operating Activities:Operating the business to earn
profit
Activities: Buying
Investing Assets that are
used to
generate revere
Financing Activities:
Obtaining funds to start &
operate a business (from owners - creditors
Assessing company's ability
to
produce
future not cash inflow
·Cash is critical to success.
company
Goal of Sinancial information
helpful predicting
in
reporting, provide arounds, timing
and of future cash flows
uncertainty
·Cash inflow, outflow & net income allow better future Cash flow than new
income alone.
predicts
, Company's ability to
pay obligation
& dividends
Cash
importantreceipt
andpayment help
financial statement users are
supplies: pay for
goods
on time?
Employees ability pay everyone
-
to salacks and
fringe benefits.
lenders
·
investorsrepay inces
and
pay
=
for
Estimating need external
financing
Fundingcanbe generate from
internally generated funds or
external financingin
Net income is Cash flow
·Net income of from
differ
a
company, and their
generated each
operations may
Because not income doen't indicare the amount of cash
generated
from operations, however
of
alway flow into present, user
gain insight
into
quality a
reliability reported
income.
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