The Statement of Cash Flow: Tracking the King
In the preceding chapters we examined the income statement in some detail. We noted its importance in measuring the organization’s performance and its familiarity as the financial statement most readily recognized and understood by nonfinancial folks. We should also recognize three shortcomings of the income statement as the sole report card of financial operations:
1. It doesn’t report on all transactions that occur in a company unless they have an immediate impact on profit or loss. Many transactions without such immediate profit and loss impact can be for big dollars, such as buying equipment ...
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