Deck 8: Reporting Financial Information: a Closer Look at the Financial Statements

Question 1

The cash flow statement is divided into what three sections?

Answer 1

Cash flows from operating activities, cash flows from investing activities, cash flows from financing activities.

Question 2

Why do organizations prepare cash flow statements and operating statements?

Answer 2

Operating statements show an organization's profitability but not its sources and uses of cash. Both are needed because the operating statement is prepared on the accrual basis.