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Examine the following financial data from Bayside Diner Pty Ltd for the financial year ending 30 June 2002 - HSC - SSCE Business Studies - Question 26 - 2002 - Paper 1
Question 26
Examine the following financial data from Bayside Diner Pty Ltd for the financial year ending 30 June 2002. Opening balance Cash sales Debtors’ receipts Total cas... show full transcript
Worked Solution & Example Answer:Examine the following financial data from Bayside Diner Pty Ltd for the financial year ending 30 June 2002 - HSC - SSCE Business Studies - Question 26 - 2002 - Paper 1
Step 1
What is the name given to this type of financial statement?
Answer
The name given to this type of financial statement is a cash flow statement. This statement is crucial for understanding the liquidity and cash management of a business as it tracks the inflow and outflow of cash over a specific period.
Step 2
Outline the role of this financial statement.
Answer
The role of the cash flow statement is to provide an overview of the cash movements of the business. It details how cash is generated from operations and how it is used in various activities such as investing and financing. By analyzing this statement, stakeholders can assess the company’s liquidity, solvency, and financial flexibility, which are essential for effective financial planning and management. Furthermore, it helps businesses identify cash shortfalls and enables informed decision-making for future investments and expenditures.