Explain how the structure of the statement of cash flows represents another subsection of the accounting equation.
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Explain how the structure of the statement of cash flows represents another subsection of the accounting equation. (Section 3.6)
Data from section 3.6
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It was shown in Chapter 1 that liquidity is of interest to more than one user group, but of particular interest to creditors of the business. Liquidity is measured by the cash and near-cash assets and the change in those assets, so a financial statement which explains cash flows should be of general interest to user groups:
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The structure of the statement of cash flows is connected to the fundamental accounting equation which states that Assets Liabilities Equity This equa...View the full answer
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Related Book For
Financial And Management Accounting An Introduction
ISBN: 9789332511200
5th Edition
Authors: Pauline Weetman
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