What is Cash Flow Statement? Cash flow statement is the summary of cash and cash equivalents changes. It shows the following for a particular period-
- Net cash flows from Operating Activities
- Net cash flows from Investing Activities
- Net cash flows from Financing Activities
- Net change in Cash and Cash Equivalents
The Cash flow matching homework answers are provided by the online help services which help students to match their answers if they have made the statement correctly or not.
What is meant by the term ‘cash flows’?
It simply means the inflow and outflow of cash and cash equivalents. Cash flows eliminate movements among the items that organize cash or cash equivalents as these constituents are a part of cash management of an enterprise rather than cash flow statement.It arises when the net effect of transaction is either to increase or to decrease the amount of cash or cash equivalents. Cash flow matching homework answers online help students to know the transaction which affects movement of cash.
What are the Operating activities?
The undertakings of the enterprise which generates revenue are known as Operating activities. Also, the activities which are not counted as the other two activities can be said as operating activities.Cash from operating activities refers to the cash generated in the business as a result of the activities carried out during normal course of the business.
What are the Investing activities?
The purchase and discarding of assets which are long term and other investments which are not a part of cash equivalents are called Investing activities. It can be analyzed by the changes in fixed assets and long-term investments in the beginning and at the end of the year.
What are the Financing activities?
Activities that outcome in variations in the size and structure of the owner’s capital and money borrowed by the enterprise are called financing activities. It is useful in predicting claims on future cash flows by providers of funds to the enterprise.
Cash flow matching homework answers online helps in differentiating between the sea fore said activities. The importance of separate disclosure of cash flows arising from these activities can be known by the online help service providers.
Most common cash flow problems faced by the students-
Cash flow statement is sometimes leads to complex situations when students face difficulties in finding the answers. Here comes in the picture Cash flow matching homework answers which help in matching the answers online and get to know about the reasons of differences. Online help service providers have experts who provide professional help in guiding students in best possible way. Let’s discuss some problems which often come into existence while preparing cash flow statement.
- Exceeded overhead expenses-
Overheads like rent, telephone bills, utilities, etc. sometimes exceed the revenue of business which can hurt the cash flow. As they are persistent, they can be challenging as well.
- Slow-paying invoices-
These are the common problems for cash flow. Slow payments create financial problem. Students often face difficulties how to treat these items.
- Surplus inventory-
Treatment of surplus inventory can cause problem. Tying up of cash flow must be treated properly.
- Bad debts-
How to treat the bad debts can be a one of the common problems faced by students. Bad debts are harm to cash flows and profitability.
- Confusion on treatment of some items-
Some items like sale of an item of non-current assets may arise a situation where it is difficult to understand that it should be treated as operating activities or investing activities. In such situation, the gain or loss which is included in the determination of net profit or loss should be treated as cash flows from investing activities.
What are the benefits of classification of activities?
As we have discussed earlier that cash flow statement should be classified as operating, investing and financing activities, the reason behind this is presenting the data in the most appropriate form. Let’s find out some benefits of classifying these activities-
- Classification by activities provides information which permits users to judge the impact of the activities on the financial position of the enterprise.
- The relationship between the activities can be shown easily when they are classified into three parts.
- By classification, the amount of cash and cash equivalents can be calculated
- It helps in providing clear view of the single transaction which classified differently.
Limitations of cash flow statement-
We must know the limitations of the cash flow statement-
- This statement ignores the non-cash transactions. For example- conversion of debentures into equity shares.
- It rearranges the primary data which already a part of other statement and present it as secondary data. We can call this statement as secondary data based statement.
- This statement is historical in nature.
Cash flow statement is very important for the enterprise and has many uses. Students generally need help when they have prepared the whole statement, but their answers are not matching. The difference between the cash and cash equivalents at the beginning of the period and at the end of the period must be matched with the net increase/decrease in cash and cash equivalents. Cash flow matching homework answers not only help students to match their answers but also help in finding the reasons of differences in answers.