Wonderful Objective Of Preparing Cash Flow Statement
What is the Purpose of the Cash Flow Statement.
Objective of preparing cash flow statement. I To ascertain the specific sources ie operating investing financing activities of cash and cash equivalents generated by an enterprise. A Cash Flow Statement supplies various information relating to inflows and outflows of cash to the users of accounting information in the following ways. It presents the investment and financial activities of a.
The main objective of preparing cash flow statements for a particular accounting period is to present information regarding the inflow and outflow of cash. The Cash Flow statement helps to define the optimum cash position for the firm. Preparation of a cash flow statement serves various purposes like stating the cash movements with respect to cash inflows and outflows the performance of strategic decisions taken by the management and provides relevant information about the financial well-being of an organization so that its liquidity status can be derived and projected to.
The primary objective of cash flow statement is to provide useful information about cash flows inflows and outflows of an enterprise during a particular period under operating investing and financing activities. Besides It presents the investment and financial activities of a concern for a particular period. It provides the information through the Cash Flow Statement that will be useful in assessing the ability of any company to generate the cash and cash.
Funds can borrow or invest accordingly after knowing the cash position of the firm. An enterprise presents its cash flows from operating investing and financing activities in a manner which is most appropriate to its business. State the primary objective of preparing Cash Flow Statement.
Another objective behind financial statements is to provide information about the resources available with business ie. Opening Balance There is opening balance of cash in hand in the preparation of fund flow statement. The various objectives of preparing cash flow statement are as follows i The first and most important objective of cash flow statement is that helps to ascertain the gross inflows and out flows of cash and cash equivalents from operating investing and financial activities.
The Cash Flow Statement should report cash flows during the period classified by operating Investing and Financing Activities. It shows the cash earning capacity of the firm. Ii To ascertain the specific uses ie operating investing financing activities of cash and cash.