Effects of all cash flows affect the balances of various accounts reported in the balance sheet . Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 21, Problem 21.1Q

Effects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Please explain the solution to this general accounting problem using the correct accounting principles

Need Answer of this General Accounting Question with best method

I am looking for the correct answer to this general accounting problem using valid accounting standards.

Answer 2

Textbook Question

Chapter 21, Problem 21.1Q

Effects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 21, Problem 21.1Q

Effects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 21, Problem 21.1Q

Effects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Answer 8

Expert Solution & Answer

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

To Explain: The need for an additional financial statement that reports the cash flows.

Answer 12

Explanation of Solution

The cash flow statement reports the actual cash inflow and outflow, which occurred during the accounting period. Though the cash flow affects the balances of the various accounts represented in the income statement and the balance sheet, the original cash transaction is not clear. This is accrual principle as the prepaid expenses, outstanding expenses, accrued income are all not shown by them.

Thus, preparing the cash flow statement gives a clear overview of all the expenses made and the cash received in the accounting period.

Answer 13

Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2Q Ch. 21 - Prob. 21.3Q Ch. 21 - Prob. 21.4Q Ch. 21 - Prob. 21.5Q Ch. 21 - Prob. 21.6Q Ch. 21 - Prob. 21.7Q Ch. 21 - The sale of stock and the sale of bonds are...Ch. 21 - Does the statement of cash flows report only...Ch. 21 - Prob. 21.10Q

Effects of all cash flows affect the balances of various accounts reported in the balance sheet . Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?

Videos

Explanation of Solution

Want to see more full solutions like this?

Chapter 21 Solutions

Additional Business Textbook Solutions