Chapter 8
Reporting Cash Flows and Changes in Owners’ Equity
In This Chapter
Revisiting the determination of profit
Addressing changes in owners’ equity
Looking at profit from the cash flow point of view
Preparing the cash flows report
The financial report of a business consists of three primary financial statements: the income statement for the period, the balance sheet at the end of the period, and the statement of cash flows for the period. This chapter examines the statement of cash flows, which is the most recent financial statement to be required in business financial reports.
The history of the statement of cash flows is complex; despite repeated calls from the investment community for cash-flow information in financial reports — and after a rather inept experiment with reporting a funds flow statement — in 1987, the accounting profession finally required that a statement of cash flows be included in financial reports. The cash-flow statement has been included in financial reports for about two decades now, and it’s likely to remain a permanent fixture in business financial ...
