Page 48 - Finance for Non-Financial Managers

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The Structure and Interrelationship of Financial Statements
exchange of cash. For
example, your company
A report that shows the
borrows money from the Statement of cash flow 29
effect of all transactions that
bank and puts the money involved or influenced cash, but didn’t
into its checking account appear on the income statement. Also
for later use. No income known as cash flow statement.
created here and no
expense yet—until the interest begins to accumulate. So how do
you get this on the books? And how do you report it? The
answer is the statement of cash flow. It will show the effect of all
transactions that involved or influenced cash, but didn’t appear
on the income statement. Going back to our football game
analogy, you’ll recall we noted about Figure 2-3 that these two
statements between them would contain every transaction that
occurs in a company between any two balance sheet dates.
You’ll learn more about the statement of cash flow in Chapter 6.
Other Report Formats
There are a wide variety of other reports that may accompany
the basic statements in a financial report or be prepared sepa-
rately for special purposes. They are often more valuable than
the basic statements in managing specific areas of the compa-
ny’s finances. Examples include reports on accounts receivable,
accounts payable, inventory, and much more. We don’t have
room in this book to cover all the possibilities, but we will men-
tion some of them in later chapters as they relate to the subject.
Perhaps it is enough here to recognize that computerized
accounting data today is increasingly maintained in flexible
database formats that enable the accounting department to pro-
duce arrangements of data into a seemingly endless variety of
formats. If you feel a critical need for information that you’re not
getting from reports now, a visit to the controller or the compa-
ny bookkeeper might surprise you at how easily a responsive
financial analyst can produce exactly what you need.