Question 1

Q1. What are Cash Flow Statements?

Accepted Answer

Ans: Cash flow statements are used to track the inflow and outflow of cash in businesses. A good cash position indicates the stability and operational efficiency of a company.

Question 2

Q2. What are the three components of cash flow statements?

Accepted Answer

Ans: Cash Flow Statements have three major components, which include operating, investment, and financial activities.

Question 3

Q3. How to calculate cash flow?

Accepted Answer

Ans: The formula for net cash flow is the difference of total cash inflows and total cash outflows.

Question 4

Q4. What is the benefit of Cash Flow statements?

Accepted Answer

Ans: Cash Flow statements are used to present the cash position of a company which helps in evaluating the financial stability and operational efficiency of a business. It also helps to verify the liquidity position of a company.