Tài liệu Principles of Accounting

Principles of Accounting


Fulbright Economics Teaching Program Principles of accounting Lecture 4
2005-2006


The main objective of
the statement of cash flows


ã Shows the relationship between the Net
Income and Net Cash Flow
ã Explains how cash is generated and used
during a business period
ã Evaluates the ability to pay debt in time
ã This information is very useful to decision
makers (managers, lenders, shareholders )
in forecasting the future cash flows


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The necessity of
the statement of cash flows


Additionally provides a lot of important information
that the balance sheet and the income statement
cannot to provide:
ã The balance sheet only reflects the values and the
sources of assets at a certain date (a point of time)
How to know how much the firm has disbursed for
purchases (or collected from liquidations) of fixed
assets during a business period?
How to know how much the firm has borrowed (or
paid back) during a business period?


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Nguyen Tan Binh 2