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Concept explainers
1. Identify and briefly describe the three categories of
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Cash flow statement:
Statement of cash flows is a statement showing the source and application of cash between two balance sheet dates. It shows how the cash is sourced and used for the company’s operating, investing, and financing activities.
To explain: The Three categories of cash flows which are reported in the cash flow statement.
Answer to Problem 1RQ
In the cash flow statement, following three categories of cash flows are reported.
1. Cash flow from operating activities,
2. Cash flow from investing activities, and
3. Cash flow from fiancé activities.
Explanation of Solution
Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.
Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.
Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.
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Chapter 11 Solutions
Financial Accounting
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