QCAA Accounting External Practice Exam

The cash flow statement records cash inflows and outflows during a period, organized into operating, investing, and financing activities. This structure shows how cash is generated from the core business, how cash is used for investments, and how financing arrangements affect cash, plus how the overall cash balance changes. It helps assess liquidity and the ability to meet obligations, and it complements the income statement (which shows profit) and the balance sheet (which shows financial position). It doesn’t report net income; that belongs to the income statement. It doesn’t show only non-cash transactions; it focuses on actual cash movements, though non-cash investing or financing activities may be disclosed separately. It doesn’t predict future cash flows; those are forecasts or budgets.