COMMERCE 1AA3 Study Guide - Final Guide: Deferral, Cash Flow Statement, Accrual

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Aadil Merali Juma

Document Summary

The statement of cash flows: one of the four required financial statements shows the changes in cash (including cash equivalents) for a specified period. Purpose: to provide information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during a specific period. While a business must have profitable operations in order to operate over a long period of time, it must also have cash to operate. More information can be obtained for evaluation of the company by studying the income statement together with the cash-flow statement: cash includes cash on hand, cash in the bank, and cash equivalents. Cash equivalents are short-term investments that are readily convertible into cash such as money market investments and investments in canadian. Format: the general format of the cash flow statement is organized around the three activities of operating, investing, and financing.