Principles of Financial Accounting

Task:
Many small business owners focus on the cash balance in their bank accounts and may not use the statement of cash flows to analyze how their businesses are generating or using cash. Discuss what information is found on the statement of cash flows that is just as important as the bank balance (or more so) for the purpose of understanding the financial position of a company.
No particular style is requiredPlease use proper paragraph structure when responding.If you have more than one main idea in your paragraph, then start a new paragraph.Ensure each question has an answerInclude in-text citation and a reference page must be attachedStatements of cash flow is an important financial statement for a business to use. The purpose of the statement is to summarize the amount of not only cash in the bank account but also cash equivalents that are going into and out of a company (Murphy, 2019). Ultimately, the cash flow statement is a representation of how well a company is managing not only cash put also debts, obligations and operating expenses (Murphy, 2019). The cash flow statement is an important tool that is needed in conjunction with balance sheets and the income statement to show how the company is not only functioning but predicts how it will thrive or diminish over time (Murphy, 2019). This is important not only for the company but investors. For all these reasons, this is why the statement of the cash flow is an even more important tool than just the money in the bank account. 



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