The purpose of the statement of cash flows is to promote understanding of the financial implications of business activities by providing details of the sources and uses of funds of the company. Although the profit and loss account and balance sheet are based on accrual accounting, the statement of cash flows is intended to represent cash flow of economic activities. Most of the problem with the preparation and, finally, the understanding, the statement of cash flows due to lack of understanding of the relationship between the statement of cash flows and other financial reports. The purpose of this paper is to discuss the conceptual framework underlying the preparation of the statement of cash flows, based on these relationships.
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by Paul Simcoe, Luann J. Lynch Source: Darden School of Business 19 pages. Publication Date: April 4, 2008. Prod. #: UV0879-PDF-ENG
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