Classification of Cash Flow Statements You Must Know

Even though it can be explained briefly, the cash flow statement can be divided into 3 types. The classification of this report is based on its association with activities at the company that you can later learn specifically in Bookkeeping services Parramatta. So, according to the type of activity, the cash flow statement can be divided into;

1. For the first type, operational, cash flow statement only contains cash flow in the field of company operations in a certain period. Things that are included in this type of report are the receipt of funds from customers, payment of debts, giving employee salaries, receiving interest, and paying tax bills. So, all income or expenses related to the company’s operational activities are included in this cash flow statement.
2. As for the type of funding, reported cash flows are those related to the company’s funding activities. This report covers the reduction and addition of capital that occurred within a certain time frame.
3. Finally, the cash flow investment statement consists of cash flows relating to the investment activities of the company within a certain period. Examples of company activities included in this type of cash flow statement are the purchase and sale of fixed assets, and equity participation.

Seeing from the understanding, the cash flow statement is made with the aim that the data from the outgoing and incoming cash flows can be presented in detail and in full. Presentation based on a certain period also makes this report easy to control and is used as reference material for financial statements in the same period or later. By looking at the information contained in the cash flow statement, the company can read financial conditions and launch the necessary financial strategies. The report can be taken into consideration by the company regarding the need to evaluate the net assets.

Not only that, but the cash flow statement also has a variety of other important objectives, such as showing the company’s estimated cash flow in the next period and knowing the company’s ability to pay obligations. The report can also be a basis for making decisions so that business performance is more efficient, as well as a report relating to net income with changes in company cash. So, by knowing the various functions, the company should be able to prepare cash flow statements precisely and in detail so that its future is guaranteed.

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