Statement of cash flows - General Facts

4 important questions on Statement of cash flows - General Facts

Why is a statement of cash flows useful?

It helps predict the ability of the company to meet its obligations and opportunities in the short term.  It also helps explain why the company's cash accounts either increased or decreased.

Is a treasury bill with a maturity date in 90 days considered cash or not?

It is cash.

The financing activities section includes:

Borrowing, payments on principal, dividends and cash from investment/ sale of stock and sale of bonds
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Name three major adjustments needed to get from net income to the cash spent/accumulated

Adjusting for noncash expenses (such as depreciation)
Adjusting for timing differences in accrual vs. Cash (e.g. revenue not yet received as cash, accumulation of inventory etc.)
Adjusting for gains and losses not part of operations

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