You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using IFRS. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you present a schedule of predicted cash sources and cash needs at the end of each week for the following week.
Ken Harmon, the company's president, has asked whether a statement of cash flows would also be useful.
Required:
Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

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The Answer of You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using IFRS. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you present a schedule of predicted cash sources and cash needs at the end of each week for the following week.
Ken Harmon, the company's president, has asked whether a statement of cash flows would also be useful.
Required:
Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

You Are the Accountant for a Small Manufacturing Firm