IAS 7Chapter 1Lesson 1
Why a statement of cash flows? Objective, scope and benefits
Step 1 of 8Learning objectives
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Every entity, whatever its business, presents a statement of cash flows for each period as an integral part of its financial statements. Read with the balance sheet and the income statement, it shows how the entity generates and uses cash, sheds light on its liquidity and solvency and makes performance comparable across entities, because cash does not depend on accounting choices.
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Learning objectives
- Explain why all entities, financial institutions included, present a statement of cash flows.
- Identify what cash flow information gives users: net assets, financial structure, comparability, forecasting.