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Definition
Integral part of financial statements
Summarizes operating, investing, and financing activities
Provides information about cash receipts and cash payments
Classification of cash flows
- Operating activities
- Investing activities
- Financing activities
Interest – SHALL be classified as operating cash flows because they enter into
the determination of net income or loss. ALTERNATIVELY interest paid may be
classified as financing cash flow and interest received may be classified as
investing cash flow.
Computation of collections
Trade AR and NR, beg xx
Add: sales (accrual basis) xx
Total xx
Less: trade AR and NR, end (xx)
Collection of AR and NR xx