Many small business owners focus on the cash balance in their bank accounts and may not use...

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Accounting

Manysmall business owners focus on the cash balance in their bankaccounts and may not use the statement of cash flows to analyze howtheir businesses are generating or using cash. Discuss what onepiece of information is found on the statement of cash flows thatis just as important as the bank balance (or more so) for thepurpose of understanding the financial position of acompany.

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Bank book and Cashflow Statement All the cash transactions wheather it is a cash receipt or a cash payment are recorded in the bank book The balance of the bank book should be debit otherwise it can be said that the organisation has an issue with its liquidity even its existence can be in danger due to lack of cash Now the purpose of the cash book is to record all the cash transactions of an organisation and to give the balance of cash in the bank account On the other hand the Cash flow statement supply the information regarding the cash inflows and outflows from different activities Any organisation has three activities which are Operating activities Investing activities and Financing activities It can be See Answer

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