Introduction to Cash Flow Statement and Its Accompanying Related Concept - Cost Accounting

Cash flow statement:

A cash flow statement is a financial statement that provides information about the inflow and outflow of cash in an organization during a specific period. It shows how a company generates and uses its cash and cash equivalents. A cash flow statement is divided into three parts: operating activities, investing activities, and financing activities.

Accompanying Related Concept - Cost Accounting:

Cost accounting is a process of identifying, measuring, analyzing, and reporting the cost of production, operation, and services. It helps in determining the cost of goods sold, which is the cost of goods that were sold during a specific period. Cost accounting is essential for budgeting, forecasting, and decision-making.

Relation between Cash Flow Statement and Cost Accounting:

Cash flow statement and cost accounting are interrelated. Cost accounting provides information about the cost of goods sold, which is used in the cash flow statement. The cost of goods sold is deducted from the revenue to calculate the gross profit, which is used in the operating activities section of the cash flow statement.

Cost accounting also helps in identifying the cost of production, which is used in the investing activities section of the cash flow statement. The cash flow statement provides information about the inflow and outflow of cash, which is used in the financing activities section of the cash flow statement.

Conclusion:

In conclusion, the cash flow statement and cost accounting are two important financial statements that are interrelated. The cash flow statement provides information about the inflow and outflow of cash, while cost accounting provides information about the cost of goods sold. Both statements are essential for budgeting, forecasting, and decision-making.