Accounting standards require companies to include a
statement of cash flows in a complete set of financial statements. This
statement must report information about a company’s cash receipts and
cash payments during the period. Exhibit 16.5
shows the usual format. A company must report cash flows from three
activities: operating, investing, and financing. The statement explains
how transactions and events impact the prior period-end cash (and cash
equivalents) balance to produce its current period-end balance.
| EXHIBIT 16.5 | Format of the Statement of Cash Flows |
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