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The statement of cash flows

The statement of cash flows provides reconciliatory information between the income statement and the changes in financial position of the firm for a given accounting period. It is also claimed that cash flow information is less noisy since management has less discretion in the recognition timing. Yet, many have criticized the statement of cash flows on the classification issues.
Required:
A. Discuss the pros and cons of the statement of cash flows.
B. Cite research findings regarding the information content of the statement of cash flows.

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Question 2
The statement of cash flows provides reconciliatory information between the income statement and the changes in financial position of the firm for a given accounting period. It is also claimed that cash flow information is less noisy since management has less discretion in the recognition timing. Yet, many have criticized the statement of cash flows on the classification issues.
Required:
A. Discuss the pros and cons of the statement of cash flows.
The pros of the cash flow statement are that it helps plan and manage future financial statements, and helps the company to know how it will pay its immediate expenses, including wages, Further it enables the investors to decide about ...

Solution Summary

The statement of cash flows is discussed very comprehensively in this explanation.

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