Write a short report (3%u20135 paragraphs) on the purpose of a cash flow stateme

Question

Write a short report (3%u20135 paragraphs) on the purpose of a cash flow statement. Be sure to provide examples of and differentiate among cash flows form operating, investing, and financing activities. Include the two methods used in reporting cash flows from operations. Which one is more prevalent?

Briefly identify and explain the major components, format, and limitations of the income statement, balance sheet, and statement of stockholders%u2019 equity. Be sure to describe the interrelationships among them.

Explanation / Answer

Cash flow statements and projections express a business's results or plans in terms of cash in and out of the business, without adjusting for accrued revenues and expenses. The cash flow statement doesn't show whether the business will be profitable, but it does show the cash position of the business at any given point in time by measuring revenue against outlays.

The cash flow statement should be prepared on a monthly basis during the first year, on a quarterly basis for the second year, and annually for the third year. The following 17 items are listed in the order they need to appear on your cash flow statement:

Managing Payables
Top-line sales growth can conceal a lot of problems-sometimes too well. When you are managing a growing company, you have to watch expenses carefully. Don't be lulled into complacency by simply expanding sales. Any time and any place you see expenses growing faster than sales, examine costs carefully to find places to cut or control them. Here are some more tips for using cash wisely:

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