Unit 10: Statement of Cash Flows
The balance sheet and income statement are prepared using the accrual basis of accounting. The statement of cash flows is prepared using information from accrual-basis statements to tell what cash was received and how cash was spent. The statement of cash flows classifies business transactions as operating activities, investing activities, or financing activities. Cash management is crucial to business survival. Just as you might make enough on an annual basis to pay all your bills, you need to know if you will have enough in your checking account when your school tax bill is due. The timing of cash flows is critical for all businesses to survive.
Completing this unit should take you approximately 6 hours.
10.1: Operating Activities
Operating activities on the statement of cash flows stem from a company's day-to-day operations. These activities include making sales to customers and paying vendors and employees. The operating activities section of the statement of cash flows can be prepared using the direct or indirect method.
10.2: Financing Activities
10.3: Investing Activities
Unit 10 Practice