Statement of Cash Flows, Research Paper Example

Statement of Cash Flows in an organization serves the purpose of availing the gross receipts together with the gross payments for a specific time period. Both the gross reports along with the gross payments are usually documented in the Statement of Cash Flows based on distinctive classification which includes the following: operating activities, investing activities and the financing activities.

Statement of Cash Flows assist the owner of the business in the planning and controlling income flow that facilitate efficient implementation of financial obligation based on the set schedule. The three classifications mentioned above reflects some net change which is anticipated to be equivalent to the change in the “cash along with cash equivalents” in the organization in a particular reporting period. A good illustration of the point is possibly the 2010 cash flow statement which is anticipated to be reflected in the report the balance sheets of December 31, 2009 plus December 31, 2010 cash and cash equivalents of the organization (Adhikari & Duru, 2006).Some categories are used within the statement apart from their commonly accepted purpose of reporting operating, investing, in addition to financing activities. The categories include calculation of the total amount of payable interest, the total amount of payable taxes and also any other vital activity involving investing and financing that does not necessarily require that cash is used (Appuhami, 2009).  The organizations Statement of Cash Flows is commonly distributed at the time of distributing the income statements and the balance sheet of the company. The Statement of Cash Flows in the organization reflects the transactions summary which has significant effects on cash or even cash equivalents.

References

Adhikari, A. & Duru, A., (2006). “Voluntary disclosures of free cash flow information”. Accounting Horizons, 311-332.

Appuhami, R., (2009). “Corporate investments and the dual-role of working capital” Journal of            Applied Management Accounting Research, 53-62.