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What is Cash Flow Statement?
In a business the transaction of money coming in and going out of the business is tracked by cash flow statements. It includes all the expenditure values, revenue generated, profit and losses incurred in a specific period of time. The parameters in which an amount of cash is put to is understood by the cash flow statements. In this Preparation of cash flow statement homework help article, we discuss about the preparation method of it.
Sections of Cash Flow Statement
The cash flow statement is comprised of three major sections that are listed below in our Preparation of cash flow statement homework help article.
1. Cash flows from operating activities
2. Cash flows from investing activities
3. Cash flows from financing activities
While, the most commonly used method to prepare the cash flow statement is the indirect method, it is supposed to be the most efficient one too. The following steps shown in this Preparation of cash flow statement homework help article are worth reading
1. A person needs to start with the net income information
2. Depreciation and amortization are non-cash expenses that needs to be added.
3. Addition of losses and subtraction of all the profit is done on sales on assets.
4. An accountability is need to be set for all the changes done in cash expenses.
5. All the changes in assets and liabilities are accounted while notes and dividend payable are excluded from it.
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