The income statement and the statement of cash flows, in addition to the statement of financial position, are the three financial statements that organizations cannot do without. The statement of cash flows was the last one to be instituted but is now regarded as a necessity in the accounting field. The following exercise takes a closer look at the statement of cash flows and allows time for your thoughts and consideration of its role. In formulating the Exercise, consider the following questions: • What type of information does the statement of cash flows provide investors? • How do changes in liquidity affect an organization? In an approximately 500-word response, address the following : Cash is the lifeblood of any business, and without it survival is very unlikely. • Do you agree or disagree? • Explain what information a statement of cash flows provides to supplement a statement of financial position and an income statement. • Why is there still some controversy surrounding published statements of cash flows? • How important are such statements in terms of the financial reporting requirements within YOUR country?
Sample Solution
