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a)In the economic financial accounting, a cash flow statement, also termed as statement of cash flows, is a financial statement that demonstrates how changes in balance sheet accounts and income impact cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.
It differs from the income statement because An income statement is utilized to evaluate the financial performance of the company, Particularly how much revenue it made, how many expenses it paid, and the resulting profit or loss from the revenue and expenses.
b)The cash flow statement is one of the primary financial statements utilized in business operations, including small businesses.
The first section of the cash flow statement reveals the cash received and used during normal operating activities. This section details the changes in the ledger account balances for the current assets and current liabilities.
The second section belongs to investment activity. Over all of the firm's investments are listed under this category. Any types of purchase or sale of property, equipment and plants also belongs the investment section.
The third section of the cash flow statement lists the information for the firm's financing activities. Financing activities include purchases of stock & bonds as well as dividend payments.
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Oct 29th, 2015
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