Essay About Cash Flows Paperkasandra Rossiacc And 2015Statement Of Cash

Statement of Cash Flows Paper
Statement of Cash Flows PaperKasandra RossiACC/421Kimberly BarnetteMarch 30, 2015Statement of Cash FlowsAccording to the Averkamp, CPA, MBA (2004-2015) website the purpose of the statement of cash flows (also referred to as the cash flows statement) is to provide information about a business’s gross receipts and gross payments for a specific period of time. The statement can be as short as a single page report or it can be many pages with several schedules that feed back to one main statement and is the most complex of the three major types of financial statements: the income statement, the balance sheet, and the statement of cash flows. The statement can cover a longer period of time, such as a year, or a shorter period of time, such as a month. The gross income and gross payments are reported in the statement of cash flows in one the following three classifications: operating activities, investing activities, and financing activities. The operating activities section of the statement of cash flows comes first and provides information about the cash making abilities of a company’s main activities. This section is the most important part of the statement because it best demonstrates the company’s ability to produce cash.  Some of the main items listed under operating activities can include: net income, depreciated and amortization, and chances in working capital. The investing activities classification of the statement of cash flows are listed second and shows the amount of cash companies spend on investments. These investments are usually classified as capital expenditures or monetary investments. Capital expenditures can include cash a business spends on long term items, such as plant, property, or equipment. In order to calculate a company’s “free cash flow” capital expenditures is subtracted from net cash from operating activities. Monetary investments include cash used for acquisitions, such as how much cash a company used to purchase another company.  The third and last classification on the statement of cash flows is cash flow from financing activities. This section includes any activities where the company’s own creditors are involved such as the issuance or purchase of common stock.  The net change from all three of these classifications equals the change in the business’s cash and cash equivalents during the reporting period. Additionally, the statement of cash flows much also include disclosures of other information, including amounts of interest paid, the amount of income taxes paid, and any other significant investing or financing activities that did not require cash to be used (“The Statement Of Cash Flows”, 2015).