In preparing a cash flow statement, a time interval must be specified. This time interval can be three months, one year...etc. The cash flow statement shows the cash generated and used during the specified time interval.
The following are the categories where cash can be generated or used in an organization:
1. Operating activities: Income statement items are converted from the accrual basis of accounting to cash.
2. Investing activities: Recording the sale and purchase of long-term investments and property, plant and equipment.
3. Financing activities: Records the issuance and repurchase of the company's own bonds and stock and the payment of dividends.
4. Supplemental information: Records the exchange of significant items that did not involve cash and reports the amount of income taxes paid and interest paid.
No comments:
Post a Comment