Chapter 22, Problem 22.1Q

To determine

To explain: Cash flow satatement.

Answer to Problem 22.1Q

Cash flow statement is a statement which shows inflow and outflow of cash of the enterprise during an accounting year.

Explanation of Solution

Cash Flow Statement:

It is a financial statement which gives information about company’s cash inflows and outflows during an accounting year. It tells the cash position of the company and shows from where company generates its cash and how it is used in the business.

The cash flow statement includes three business activities which are as follows:

• Cash flow from operating activities
• Cash flow from investing activities
• Cash flow from financing activities

Conclusion

So, cash flow statement shows summary of cash inflow and outflow and cash position of the firm.