Unique Objectives Of Preparing Cash Flow Statement
The following are the objectives of preparing the cash flow statement.
Objectives of preparing cash flow statement. The statement of cash flows is particularly important when an acquirer is reviewing the financial statements of a potential acquiree. It presents the investment and financial activities of a. Generally a cash flow statement is prepared for a particular period or a financial year.
The main objective of preparing cash flow statement for a particular accounting period is to present information regarding inflow and outflow of cash cash and cash equivalent generated used and net changes in cash flows. The following are some of the objectives of cash flow statemen t. State the primary objective of preparing Cash Flow Statement.
Objectives of Preparing Cash Flow Statement Cash Flow Statements represents the inflow and outflow of cash and cash equivalents that have various activities in a company during a specific period under the various main activities that are differentiated. The objective of preparing cash flow statement is to gather information with regard to an enterprise ability to meet its short term liabilities. These changes in balance sheet accounts are needed to prepare certain parts of the statement of cash flows.
The primary objective of cash flow statement is to provide useful information about cash flows inflows and outflows of an enterprise during a particular period under operating investing and financing activities. The primary objective of the cash flow statement is to help management in making a decision and making a plan by providing current information on cash inflow and outflow of any accounting period. B Generating Inflow of Cash.
The statement of cash flows acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business. The objectives of cash flow statement are. It also highlights the future or prospective cash positions ie.
Advantages of Cash Flow Statement. The inflows and outflows of cash can be represented with the help of this statement. Three Sections of the Statement of Cash Flows.