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    lggkerry's Avatar
    lggkerry Posts: 1, Reputation: 1
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    #1

    Jun 3, 2007, 07:22 AM
    Income Statement
    If the purpose of the income statement is to report the results of operating activities, why is there a section on the statement of cash flows that reports the results of operating activities?
    omsailogistic's Avatar
    omsailogistic Posts: 39, Reputation: -1
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    #2

    Jun 3, 2007, 11:04 AM
    The purpose of Income Statement is to report the results of Operating Activity as also to show the various other Sources of Income generation, whereas the purpose of CFS is to show the FLOW of cash from operating activities and other activiites which are not directly related to Operations.
    For example : Interest income is shown under the income statement on the credit side either under the head Interest received or Other income which is not an income related to operational activities.
    In CFS, this fact is made clear by segregating the various sources from which Cash is generated by the company. Therefore, the interest income is not included under the head
    Income from operating activities rather are included in "Income from Investment "

    The purpose of income statement is also to show the results of business from OPERATING ACTIVITIES ON ACCRUAL BASIS. WHEREAS CFS SHOWS THE ACTUAL FLOW OF CASH WITHIN THE ORGANIZATION.
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