Financial Statements

Companies obtain finance from various sources. Usually, this finance comes from equity holders, which constitutes equity finance. This finance is perpetual and can be crucial in helping companies start their operations as startups. However, as companies progress, they have more options available in meeting their financing needs. The other finance source that companies can choose …

How Does the Current Portion of Long-term Debt Affect Cash Flow Statement? Read More »

Using and understanding financial statements are crucial for investors. These statements provide insights into a company’s operations and activities. Usually, companies report these operations through four financial statements. These include the balance sheet, income statement, cash flow statement and statement of changes in equity. Each of these plays a significant role in helping investors analyze …

How to Treat Capital Reserve in Cash Flow Statement? Read More »

Companies incur expenses to help in generating revenues. These revenues can allow companies to make profits. If companies don’t spend, they cannot make sales. Therefore, expenses are crucial in helping companies operate and continue their activities. Some may view these spendings as unnecessary. However, they support the revenues that companies generate through their operations. Companies …

Does Prepaid Rent Go On Cash Flow Statement? Read More »

Managing cash and cash equivalent resources is crucial for companies to stay liquid. This liquidity also brings many benefits, such as quicker transactions, more flexibility, better opportunities, etc. Similarly, most investors prefer investments that can illustrate better cash management. These investors obtain information about how companies manage their operations through financial statements. For most companies, …

What is the Treatment of Provision in Cash Flow Statement? Read More »

Companies prepare financial statements to report their activities to the stakeholders. These include four reports. Out of these, three use the accrual concept in accounting to present activities. While it is a mandatory accounting concept, it can also be confusing. Furthermore, they do not show how a company uses its cash resources or report cash …

How Will You Treat Payment of Interest on Debentures in Cash Flow Statement? Read More »

The cash flow statement is one of the primary financial statements prepared by companies for financial reporting. This statement covers the cash movements in cash and cash equivalent balances during a period. In accounting, the cash flow statement allows companies to report cash activity. The other financial statements use the accrual concept, which can be …

Where Do Security Deposits Go on a Cash Flow Statement? Read More »

Cash inflows and outflows are a crucial part of any company. These flows may relate to financial or business transactions. When these transactions occur, companies can record the cash flows in their accounts. These cash transactions then become a part of the cash flow statement. In accounting, cash flows are not necessary to record a …

How Do Proceeds on Sale of Fixed Assets Affect Cash Flow Statement Read More »

Companies are separate legal entities that can exist on their own. These entities are similar to other businesses since they operate similarly. However, they differ from other structures due to the separate legal entity feature. Through this, companies can transact without their owners’ involvement. Nevertheless, they may also face issues with being independent of their …

How Do Acquisitions and Disposals of Business Affect the Cash Flow Statement? Read More »