What information is needed in order to prepare the SCF? - comparative balance sheet, the current
income statement, and the selected transaction data
What is the purpose of the SCF? - to provide relevant information about the cash receipts and
cash payments of an enterprise during a period
Why i...
Acct 221 Chapter 5 SCF
What information is needed in order to prepare the SCF? - comparative balance sheet, the current
income statement, and the selected transaction data
What is the purpose of the SCF? - to provide relevant information about the cash receipts and
cash payments of an enterprise during a period
Why is the SCF useful? - it provides answers to the following important questions
What questions does the SCF provide answers to? - 1. Where did cash come from during the
period?
2. What was cash used for during the period?
3. What was the change in the cash balance during the period?
What are the three actives in the SCF? - operating activities, investing activities, and financing
activities
Operating activities: - involve the cash effects of transactions that enter into determination of net
income
Investing activities: - include making and collecting loans, purchasing and selling investments
(both debt and equity) and property, planet, and equipment. generally it involves the purchases and
sales of non-current assets
Financing activities: - generally involve long-term liability and stockholders' equity items and
include (a) obtaining resources from owners (selling stock) and providing them with a return on their
investment (paying cash dividends) and (b) borrowing money from creditors and repaying that amounts
borrowed
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