ECON 3A Chapter Notes - Chapter 12: Cash Cash, Cash Flow, Income Statement
Document Summary
12. 1: the statement of cash flows - usefulness and format. Balance sheet: show increase in property, plant, equipment. Do not show additions financed or paid for. Does not show amount of cash generated by operating activities. Retained earnings statement: show cash dividends declared. But not cash dividends paid during the year usefulness of statement of cash flows. Statement of cash flows: cash receipts and cash payments from operating, investing, and financing activities during a period, in a format that reconciles the beginning and ending cash balances. Helps investors, creditors, others acces: entity"s ability to generate future cash flows, entity"s ability to pay dividends and meet obligations. Reveal important info about quality of reported classification of cash flows: operating activities: cash effects of transactions that create revenues and expenses. 2. investing activities: include net income: cash transactions that involve the purchase or disposal of investments and property, plant, and equipment lending money and collecting loans b.
