What Is the Purpose of the Statement of Cash Flows

question 104

Essay

What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.

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Definitions:

Net Asset Value

Net Asset Value (NAV) is the total value of a fund's assets minus its liabilities, often used to price shares of mutual funds and ETFs.

Net Asset Valuation

A method of valuing a company or an investment fund, calculated by subtracting total liabilities from total assets.

Net Income Determination

The process of calculating a company's total earnings after subtracting all expenses, including taxes and costs, from total revenues.

Accrual Accounting

An accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.