BUSS1030 Lecture Notes - Lecture 8: Financial Statement, Cash Flow, Income Statement

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1030
• Professor: Abdul Razeed

Document Summary

Explain why cash and cash flows are important to the reporting entity: cash life blood of a business the pre-eminent business asset, cash inflow and cash outflow, most important asset and highly liquid. Explain the nature, purpose and layout of the statement of cash flows. Accounting statement aasb 107: statement of cash flows: shows line items and format, shows how to balance. Proceeds from sale of property, plant and equipment. Important because cash flow is much more difficult to manipulate than earnings: cash receipts cash sales + cash collected from accounts receivable i. e. credit sales. Statement of cash flows prepared by deducing" cash flows from the information contained in the income statement and balance sheet. If cash decreased since last year-end whether the decrease is acceptable and if it poses any future liquidity issues. Identify some of the potential complexities that arise with statements of cash flows.