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Details of a Cash Flow Statement

Autor:   •  December 6, 2018  •  Case Study  •  752 Words (4 Pages)  •  79 Views

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Part 1


To: The Vice President Marketing, Susan Henderson

From: Assistant Accountant, Erick Smith

Date: 28/11/2017

Subject: Details of a Cash Flow Statement

Financial statements serve a crucial part for many business stakeholders who are interested in a particular organization as their basis of decision-making mostly relies on the information accrued from these documents. Among these statements is the statement of cash flows which reports the cash generated by the company in a given period. The cash flow statement has a heading for the specific business period of interest and under it are the various financial events within the period that led to cash streams into or out of the business.

The various cash movements into and out of the business are grouped into cash from; operating activities, financing activities, investing activities and as well as supplemental information provided by the business accounts department. The cash from operating activities reports the company’s net income and converts it from its accrual nature into cash. The balances in the company’s assets and liabilities such as wages, supplies, and notes payable accounts receivable are converted into cash. This section also allows for adjustments for losses and gains from the sale of long-term assets and the depreciation expense. Cash flows from investing activities involve the cash changes (gains or losses) incurred from the sale/purchase of long-term investments, plant or property. These are usually the long-term asset accounts like furniture, land, buildings, vehicles, equipment, and others. Cash from financing activities entails the balances of the long-term liabilities and owner's equity accounts such as deferred income tax bonds payable, notes payable retained earnings common stock and others. The financing activities cash flow thereby comprises the cash changes arising from repurchase and issuance of a company's stock as well as those brought about by borrowings and repayment


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