(a)
Financial statement
A financial statement is the complete record of financial transactions that take place in a company at a particular point of time. It provides important financial information like assets, liabilities, revenues and expenses of the company to its internal and external users. It helps them to know the exact financial position of the company. There are four basic financial statements; they are:
- Balance Sheet
- Income statement
- Statement of
retained earnings - Statement of
cash flows
To define:
The statement of cash flows.
(a)
Explanation of Solution
Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.
(b)
To ascertain:
Whether cash flow statement is an optional financial statement.
(b)
Answer to Problem 1Q
No, Cash flow statement is not an optional financial statement.
Explanation of Solution
As per Generally Accepted Accounting Principles (GAAP) it is mandatory that a company must prepare statement of cash flows, when preparing financial statement for a company. It is the one of the basic financial statement which is required to be prepared by the company.
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Chapter 12 Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
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