Preparation of the Statement of Cash Flows

Assignment’s Questions / Requirements You group will perform a cash flow analysis and answer the following assignment’s questions. Question 1. Discuss in details the purposes of the statement of cash flows?
Question 2. Describe the concept of cash used in the preparation of the statement of cash flows – Cash and Cash equivalent?
Question 3. Explain why cash flows from operating activities are important to users of a statement of cash Flow?
Question 4. Why does the cash on hand balance as at the end of the financial year in the statement of cash flow not concur with the cash balance shown in current assets in the statement of financial position?
Question 5. Distinguish between cash flows from operating activities, investing activities and financing activities. According to the relevant standard, identify three separate cash flows where the accounting standard appears to allow classification under more than one activity. Explain why such choice of classification is allowed?
Question 6. Describe the direct method of preparing the cash flows from operating activities in a statement of cash flows. Contrast this with the indirect method?

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