Why are companies required to prepare a statement of cash flows
Write a 350-word response to the following:
Why are companies required to prepare a statement of cash flows? Why is the statement of cash flows divided into three sections? What does each section tell you about the operations of a company?
Format your response consistent with APA guidelines.
………………….Answer preview……………………….
The other financial statements like income statement are based on accrual accounting which accounts for non-cash items therefore revenues reported doesn’t mean they have been collected. This is done to show how financially healthy a company is. Accrual accounting does not show clearly how much cash a company is generating that is why the statement of cash flow is there to provide this information. (Sprouse & Moonitz, 1962)……………………….
APA
532 words
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