Assignment 2

Cash flow statements (SLAS 09)




1. What are the benefits of cash flow informations?



• A cash flow statement, when used in conjunction with the rest of the financial statements, provides in formation that enables users to evaluate the changes in the assets of an entity, its financial structure (Including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities.

• Cash flow information is useful in assessing the ability of entity to generate cash and cash equivalents and enables Users to develop models to assess and compare the present value of the future cash flows of different entities.

• It also enhances the comparability of the reporting of operating performance by different entities because it eliminates the effects of using different accounting treatments for the same transactions and events.

2. What are the activities, including in a Cash flow statement?



• Operating activities

• Investing activities

• Financing activities

3. Give some examples about the financial activities?



• Cash proceeds from using issuing shares or other equity instruments.

• Cash payment to owners to acquire or redeem the entity's shares.

• Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short or long term borrowings.

• Cash repayments of amounts borrowded.