ACCT1021 Study Guide - Midterm Guide: United States Treasury Security, Retained Earnings, Giro
Document Summary
Cash flows: growing profitable operations do not always ensure positive cash flow. Classifications of the statement of cash flows: explains how the amount of ash on the balance sheet at the beginning of the period has become the amount of cash reported at the end of the period. Definition of cash includes cash and cash equivalents a. i. Cash equivalents: short-term, highly liquid investments that are both 1) readily convertible to known amounts of cash and: so near to maturity there is little risk that their value will change if interest rates change a. ii. Generally, only investments with original maturities of three months or less qualify as a cash equivalent under this definition. Cash flows from operating activities: cash inflows and outflows that relate directly to revenues and expenses reported on the income statement, two approaches for presenting the operating activities: b. i.
