ACCT20100 Chapter Notes - Chapter 12: Cash Flow Statement, Money Market Fund, Cash Cash
Document Summary
Cash flow= positive cash flow permits a company to: expand operations, replace worn assets, take advantage of new investment opportunities, pay dividends to owners. Statement of cash flows explains how the amount of cash on the balance sheet at the beginning of the period has become the amount of cash reported at the end of the period. Cash equivalents: short term, highly liquid investments that are both: 1. Readily convertible to known amounts of cash: 2. So near to maturity there is little risk that value will change if interest rate changes less than 3 months to maturity: examples= treasury bills, money market funds, and commercial paper. Statement of cash flows reports: 1. Investing activities) and changes in short term debt (included in financing. Activities: two alternative approaches for presenting this section: Direct method: reported the components of cash flows from operating activities as gross receipts and gross payments reports the cash effects of each operating activity.
