Accounting Essay

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1. Define the cash flow statement and identify the additional information that may be gained from it that is not otherwise available through the other financial statements. The cash flow statement refers to a financial statement of providing information on both the inflows (daily operations and external investments) and outflows (payments for business activities and investments) of the cash for an organisation, which is widely used in financial accounting (Deegan & Samkin, 2011). It reflects the impacts of the movements of capitals in balance sheet and income on the cash equivalents of an organisation, and provides aggregate data to separate the analysis down to operation, investments, and other financial activities (Deegan & Samkin, 2011). The cash flow statement differs from balance sheet in terms of including only the cash inflows and outflows as well as the cash equivalents of an organisation during a period of time. The transactions that not having direct relationship with cash receipts and payments do not include in the cash flow statement, which may include depreciation, credit losses, write offs of bad debts, and a few of other non-cash transactions (Deegan & Samkin, 2011). Different from balance sheet or other income statement, cash flow statement is able to provide detailed information about what is really happening in an organisation’s business during a specific period of time (Deegan & Samkin, 2011). It concerns the specific inflow and outflow of cash in the business, which enables manager and stakeholders to know the organisation’s liquidity and solvency, evaluate changes in the organisation’s assets, liabilities and equity as well as the organisation’s ability to change cash flows in the following periods. The cash flow statement also reflects the current operational results and the accompanying changes in the balance sheet (Deegan

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