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Problem Solving Survival Guide for Intermediate Accounting, 15th Edition, Instructor's Manual: Volume II: Chapters 15-24 by Terry D. Warfield, Jerry J. Weygandt, Donald E. Kieso

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CHAPTER 23

STATEMENT OF CASH FLOWS

OVERVIEW

A business enterprise that provides a set of financial statements that report both financial position and results of operations is also required to provide a statement of cash flows for each period for which results of operations are provided. The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of an enterprise during a time period. The information provided in a statement of cash flows, if used with related disclosures and information in the other financial statements, should help investors, creditors, and others to (a) assess the enterprise's ability to generate positive future net cash flows; (b) assess the enterprise's ability to meet its obligations, its ability to pay dividends, and its needs for external financing; (c) assess the reasons for differences between net income and associated cash receipts and payments; and (d) assess the effects on an enterprise's financial position of both its cash and noncash investing and financing transactions during the period.

SUMMARY OF LEARNING OBJECTIVES

  1. Describe the purpose of the statement of cash flows. The primary purpose of the statement of cash flows is to provide information about cash receipts and cash payments of an entity during a period. A secondary objective is to report the entity's operating, investing, and financing activities during the period.

  2. Identify the major classifications of cash flows. ...

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