ACC 291 week 4 DQ 1in Accounting by jacob
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ACC 291 week 4 DQ 1
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?
What are the differences between the direct and indirect presentation of cash flows?
Why does the Financial Accounting Standards Board allow both methods? Which do you prefer? Why?
The statement of cash flows shows exactly how a company used its cash. Net income can sometimes be a distorted figure and to best understand whether a company can continue to fund its operations creditors and investors prefer the statement of cash flows.
By classifying the statement of cash flows into three sections it is easy to see where the cash is most used. This will help the company as well as investors...