20.0 Statement of Cash Flows
Learning Objectives
After completing this chapter, you should be able to:
- Describe the statement of cash flows (SCF) in accounting and business.
- Explain the purpose of the statement of cash flows and the two methods used.
- Describe the statement of cash flows using the direct method and explain the difference in format from the indirect method.
- Describe how the results from the statement of cash flows are interpreted.
- Describe the required disclosures for the statement of cash flows.
- Describe the types of analysis techniques used for the statement of cash flows.
- Review and understand a comprehensive example of an indirect and direct statement of cash flows that includes complex transactions from intermediate accounting courses.
- Discuss specific items that affect the statement of cash flows.
- Summarize the differences between ASPE and IFRS regarding reporting and disclosure requirements of the statement of cash flows.
Introduction
The statement of cash flows is a critical financial report used to assess a company’s financial status and its current cash position, as uniquely demonstrated in the opening story about revenue and profits versus cash. As cash is generally viewed by many as the most critical asset to success, this chapter will focus on how to correctly prepare and interpret the statement of cash flows.
Chapter Organization
