Problem:
The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of a company during a specific time period. The other financial statements do not provide any information related to the cash flows of the company. Thus, the Financial Accounting Standards Board requires that a Statement of Cash Flows be prepared and presented with the other financial statements.
There are three primary sections that comprise the Statement of Cash Flows. What are the three sections and explain what each is used for? Why is the Cash Flow Statement a cash-basis statement while the other three are Accrual based?
2,500 words