Answer the following in APA FORMAT 400 WORDS
Discuss the interrelationship of the cash flow statement to the other financial statements. In your discussion comment and explain operating activities, investing activities, and financing activities. What is the difference between an indirect and a direct cash flow statement? Which is GAAP?
Respond to the following post with the following
Post 1- sylvan
In the world of Accounting, there are different types of reporting.There is a cash flow statement, balance sheet, and income statement, also known as the profit and loss statement.The balance sheet lists the company’s assets, which is what a company owns that is of value.Assets consists of inventory, accounts receivable, cash investments, equipment, and land.It also lists the liabilities, which are amounts owed by the company.Accounts payable is an example of a liability.A liability can also be described as goods and services a company purchases on credit.Essentially, an asset is what a company owns, and a liability is what a company owes.The balance sheet also lists the owner’s equity.This is the company’s assets minus the liabilities.The total is the company’s book value.The balance sheet gives the company’s financial position.The income statement lists the company’s financial performance.This consists of the revenues and expenses.The cash flows show the cash that comes in and goes out of a company or organization.The interrelationship of the cash flows statement to the other financial statement is that the cash flows contains information from the balance sheet and income statement to determine if the company is in a good financial position.The difference between an indirect and a direct cash flow statement is the operating activities section, which is the top section of the statement.This is how the direct method is structured.The indirect method is when net income is adjusted by changing it to cash basis from accrual.This consists of fixed assets, amortization, and depreciation.GAAP stands for generally accepted accounting principles.These are the standards and procedures companies must adhere to when financial statements are composed.The financial statements that are required to be reported per GAAP are cash flow statement, income statement, and balance sheet.
Post 2 – Shannon
Cash flow statements explains what goes in, what goes out, shows how much money the company has in hand, and is shown on the balance sheet. When all the statements come together, the result is where the company remains in their financial aspect.
Operating activities falls into five categories that deal with each other directly in different steps. These categories are sales, service, manufacturing, distribution, and marketing. These things provide the main cash flow and plays a pivotal role in deciding the company’s success. Hence the phrase, “Money talks, bull**** walks.” (excuse the language, but it is a widely known phrase everyone is familiar with). On cash flow statements, these activities are recognized as accounts payable & receivable, excess in inventory, inventory shortages, certain debts, and any differences noticed in daily trading operations (working capital).
Investing activities, also on the cash flow statements, provides the amount of money disbursed or collected for a company’s investments and assets. Investing activities call for three separate statements such as cash flow, income sheets, and balance sheets. Income statements covers money brought in and money spent, balance sheets cover the money owed out and the things bringing money in, and the cfs (cash flow statement) shows how the two connect by what goes in or out through all activities.
Financing activities are the external things that increases a company’s money/assets and reimburses investors. It also represents where a company stands in their financial aspect.
The difference between a direct and indirect cash flow statement involves the cash flow from operating activities (What is the difference…, n.d.). Direct method incorporates collecting money from customers and paying the suppliers. The indirect method shows the money amount after converting income into a cash amount.
GAAP is Generally Accepted Accounting Principles. They are rules that absolutely must be followed when a company collates their financial statements. If they aren’t done to meet the standards, it can and will result in major consequences for the company.
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