The notes to the financial statements usually begin with a section on accounting policies. Common examples of items in this category include loan principal received, repayments and dividends paid. Financing activitiesįinancing activities are the activities related to financing the business with both debt (loans, which are shown as liabilities) and equity ( capital stock and other equity instruments). In the cash flow statement, investing activities include both outlays for purchases and cash receipts for disposals of investments. Investing activities concern investments in property and equipment for the business, as well as financial investments. Both methods will have the same end result and both methods are acceptable. The indirect method, which is more common, begins with net income and adjusts for any non-cash transactions and any changes in accounts receivable or other balance sheet items related to the operations. The direct method explicitly states the amounts received from customers and paid to suppliers and employees. They can be presented either through the direct or indirect method. On the cash flow statement, operating activities derive from the operations of the business itself. In a set of financial statements, the cash flow statement shows the cash flows for the year as belonging to three main areas: Related articles contain details on the balance sheet and the income statement. This article explains the cash flow statement, the accountant’s report and more. A set of financial statements is comprised of several key statements.
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