HRT 374 Lecture 4: Chapter 4
29 Feb 2020
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Chapter 4 - the statement of cash flows. The purpose of the statement of cash flows. The statement of cash flows shows the effects on cash of a business"s operating, investing, and financing activities for the accounting period. It explains the change in cash for the accounting period. Cash is defined top include both cash and cash equivalents. Cash equivalents are short- term, highly liquid investments such as money market accounts. Firms use cash equivalents for investing funds temporarily not needed for operating purposes. These short-term investments are made for 90 days or less. The main purpose of the scf is to provide relevant information regarding the cash receipts and disbursements of a hospitality business to help users to: Assess the organization"s ability to generate positive future net cash flows. Assess the firm"s ability to meet its obligations. Assess the difference between the enterprise"s net income and cash receipts and disbursements.
