Chapter 21, Problem 21.4Q

To determine

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.

Cash Equivalents: Cash equivalents are highly liquid, short term investments, which could be held by a company for not more than three months from the purchase date.

To Describe: The exception to the generalization, that transactions which involve merely purchases or sales of cash equivalents generally are not reported in a statement of cash flows.