State any two advantages of preparing cash flow statements.
Solution:
The two advantages of preparing cash flow statement are-
1. It helps in short term planning. By this we know from where we can access the cash and cash equivalent for future requirement.
2. It shows the liquidity position of the company so we know when a company have sufficient funds or if there is deficiency than a company can arrange it from other sources.
The two advantages of preparing cash flow statement are-
1. It helps in short term planning. By this we know from where we can access the cash and cash equivalent for future requirement.
2. It shows the liquidity position of the company so we know when a company have sufficient funds or if there is deficiency than a company can arrange it from other sources.
