In this chapter, you learned that companies prepare a statement of cash flows in order to keep
Question:
In this chapter, you learned that companies prepare a statement of cash flows in order to keep track of their sources and uses of cash and to help them plan for their future cash needs. Planning for your own short- and long-term cash needs is every bit as important as it is for a company.
Instructions Read the article “Financial ‘Uh-oh’? No Problem,” at www.fool.com/savings/shortterm/02.htm, and answer the following questions.
(a) Describe the three factors that determine how much money you should set aside for shortterm needs.
(b) How many months of living expenses does the article suggest to set aside?
(c) Estimate how much you should set aside based upon your current situation. Are you closer to Cliff’s scenario or to Prudence’s?
FASB CODIFICATION ACTIVITY
Step by Step Answer:
Accounting Tools For Business Decision Making
ISBN: 9780470534786
4th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso