WHAT IS ETGNORIPA IN FUNDAMENTALS
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Answer:
MEANING AND NATURE OF A CASH FLOW STATEMENT - DEFINITION
Meaning and Nature of cash flow statement:
It is a statement that provides information about the changes in the position of cash and cash equivalent of an enterprise over an accounting period.
It is a statement which accounts for all the inflows and outflows of the cash and cash equivalents.
It shows sources and the uses of the cash and cash equivalents to the users of the financial statements.
It provides information about about the historical changes in cash and cash equivalents by classifying cash flows into operating, investing and financing activities.
BENEFITS OF CASH FLOW STATEMENT - DEFINITION
Benefits of cash flow statement:
Helps in evaluating the changes in the net assets, financial structure and the flow of cash in the enterprise.
Helps in developing the models that assess and compare the present value of the future cash flows of different enterprises.
It acts as an indicator of the amount, timing and certainty of future cash flows.
It establishes relationship between the profitability and the net cash flows and its impact on the prices.
It facilitates important economic decision making with the help of cash flow analysis.
It helps to assess the ability of the enterprise to utilise the cash available.DIFFERENCE BETWEEN CASH AND CASH EQUIVALENTS - DEFINITION
Meaning of cash:
It is money in the form of currency.
It comprises of cash in hand and demand deposits with banks.
All currency balances at the end of a particular period are referred as cash balances.
Examples of cash include all the bills, coins, currency notes and demand deposits with bank.
Meaning of cash equivalents:
It means short term highly liquid investments which are readily convertible into amounts of cash.
These are those investments which are held in business to meet the short term cash commitments.
They should have known market price and should be subject to price fluctuations.
Examples of cash equivalents include certificate of deposits, short term marketable securities, etc.