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Financial Reporting Standards by David T. Doran

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CHAPTER 10

Statement of Cash Flows

Like the income statement and the statement of stockholders’ equity, the statement of cash flows (SCF) is for a period of time that concludes at the end of the period balance sheet date. The purpose of the SCF is not to indicate the amount of change in cash,1 but instead to explain how changes in cash occurred. The presentation in this chapter will concentrate on U.S. GAAP, with relevant differences under IFRS provided as needed.2

The SCF presents changes in cash that occurred during the period in three activity categories: 1) operating, 2) investing, and 3) financing. Users place primary emphasis on cash flows from operating activities because a firm’s long-term viability is dependent upon its ability to ...

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