MGAB02H3 Chapter Notes - Chapter 13: Cash Flow Statement, Current Liability, Current Asset

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10 Jan 2011
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N provide information on the success or failure of a business. However, some people are critical of accrual-based net earnings because these earnings require estimates, allocations, and assumptions. As a result, the reliability of net earnings is sometimes doubted. Cash, in contrast, is often thought of as being different. By examining investing and financing activities, a financial statement reader can better understand why assets and liabilities increased or decreased during the period: the company"s ability to generate future cash flows. Investors and others examine the relationship between items in the cash flow statement. From these, they can better predict the amounts, timing, and uncertainty of future cash flows than they can from accrual-based data. N internationally, companies currently have a choice as to whether to classify interest and dividends received (and paid) as either an operating, investing, or financing activity, however, once the choice is made, it must be applied consistently.

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