Cash Flows Essay

The contestation of bullion flows reports the cash receipts, cash payments, and net change in cash resulting from operating, investing, and backing activities during a conclusion (Weygandt, Kimmel, & Kieso, 2010, p. 614). Companies are required to prepare a statement of cash flow because it contains primal training about the company that deems utilizable for external sources, such as investors, to ferment educated decisions about a company. The information contained in the cash flow, such as the companys ability to give way cash and meet obligations, assists creditors and investors to determine the sufficient decision regarding extending credit or investing. The statement of cash flows is divided into three sections run activities, investing activities, and financing activities (Weygandt, et al, 2010). Each of these sections earn reflect their own characteristics of transactions and some separate events. First, operating activities acknowledge transactions that cook r evenues and expenses these are included in the endeavor of net income (Weygandt, et al, 2010).Second, investing activities has two purposes includes the accomplishment and disposing of investments and property, plant, and equipment, and lending money and collecting the loans (Weygandt, et al, 2010). Third, financing activities include two purposes obtaining cash from progeny debt and repaying the amounts borrowed, and obtaining cash from stockholders, repurchasing shares, and paying dividends (Weygandt, et al, 2010, p. 615). Operating activities, which include income statement items are hard currency inflows from trade of goods and services, and from interest received from dividends received coin outflows to suppliers for inventory, employees for services, and others for expenses (Weygandt, Kimmel, & Kieso, 2010, p. 616). Investing activities investments and semipermanent assets Cash inflows from sale of property, plant, and equipment, and collections on loans to other en tities Cash outflows to obtain property, plant, and equipment, purchase investments in debt, and making loans to other entities (Weygandt,Kimmel, & Kieso, 2010, p. 616). Financing activities involves semipermanent liabilities and stockholders equity Cash inflows from sale of common stock, and from issuance of long-term debt Cash outflows to stockholders as dividends, and to redeem long-term debt or reacquire capital stock (Weygandt, Kimmel, & Kieso, 2010, p. 616).ReferencesWeygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). fiscal accounting (7th ed.). Retrieved from The University of Phoenix eBook Collection database.