Acca financial Accounting (FA) Study Text ac ca (FA)

The drawbacks of a statement of cash flows 

i)

The statement of cash flows uses historic cash flows (a limitation

 

that can be levied at all components of the financial statements).

 

Users of the accounts are particularly interested in the future.

ii)

No interpretation of the statement of cash flows is provided within

 

the accounts. Users are required to draw their own conclusions as

 

to the relevance of the figures contained within it.

iii)

Non-cash transactions, e.g. bonus issues of shares and

 

revaluations of assets are not highlighted in the statement of cash

 

flows (although they are disclosed elsewhere.

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