33:382:103 Chapter 16: Accounting Chapter 16
11 Nov 2016
School
Department
Course
Professor
Document Summary
Chapter sixteen: reporting the statement of cash flows. The purpose of the statement of cash ows is to report cash receipts and cash payments related to operating, investing, and nancing activities during a period. Information about cash ows can in uence decision makers in important ways. It helps them decide whether a company has enough cash to pay its existing debts as they mature, and is also used to evaluate a company"s ability to meet unexpected obligations and pursue unexpected opportunities. Cash ows are de ned to include both cash and cash equivalents. The statement of cash ows explains the difference between the beginning and ending balances of cash and cash equivalents. A cash equivalent must 1. be readily convertible to a known amount of cash and 2. be suf ciently close to its maturity so its market value is unaffected by interest rate changes.
