HELPFUL HINT The statement of cash flows helps users determine if the company generates enough cash from operations to fund its investing and financing activities. The primary purpose of a statement of cash flows is to provide financial information about the cash receipts and cash payments of a company for a specific period of time (see Helpful Hint). To help investors, creditors, and others in their analysis of a company's cash position, the statement of cash flows reports the cash effects of a company's operating, investing, and fi- nancing activities. In addition, the statement shows the net increase or decrease in cash during the period, and the amount of cash at the end of the period. Reporting the sources, uses, and change in cash is useful because investors, creditors, and others want to know what is happening to a company's most liquid resource. The statement of cash flows provides answers to the following simple but important questions. 1. Where did cash come from during the period? 2. What was cash used for during the period 3. What was the change in the cash balance during the period? As shown in Softbyte's statement of cash flows in Illustration 1.9, cash increased $8,050 during the period. Net cash provided by operating activities increased cash $1,350 (cash re- ceipts from revenue less cash payments for expenses). Cash flow from investing activities decreased cash $7,000 (purchase of equipment). And cash flow from financing activities in- creased cash $13,700 (investment by owner less drawings by owner). At this time, you need not be concerned with how these amounts are determined. Chapter 17 will examine the state- ment of cash flows in detail. People, Planet, and Profit Insight Beyond Financial Statements 3BL Should we expand our financial statements beyond the income statement owner's equity state- ment, balance sheet, and statement of cash flows? Some believe we Marek Uliasa/Stockphoto should take into account ecologi- cal and social performance, in ad- dition to financial results, in evaluating a company. The argument is that a company's responsibility lies with anyone who is influenced by its actions. In other words, a company should be interested in benefit- ing many different parties, instead of only maximizing stockholders interests. A socially responsible business does not exploit or endanger any group of individuals. It follows fair trade practices, provides safe environments for workers, and bears responsibility for en- vironmental damage. Granted, measurement of these factors is difficult. How to report this information is also controversial. But many interesting and useful efforts are underway. Throughout this textbook, we provide additional insights into how companies are attempting to meet the challenge of measuring and reporting their contributions to society, as well as their financial results, to stockholders. Why might a company's stockholders be interested in its envi ronmental and social performance? (Go to Wiley PLUS for this answer and additional questions a4 DO IT! 5 Financial Statement Items Presented below is selected information related to Flanagan Company at December 31, 2020 Flanagan reports financial information monthly Equipment $10,000 Utilities Expense $ 4,000 Cash 8.000 Accounts Receivable 9.000 Service Revenue 36,000 Salaries and Wages Expense 7.000 Rent Expense 11,000 Notes Payable 16,500 Accounts Payable 2,000 Owner's Drawings 5.000 a. Determine the total assets of Flanagan Company at December 31, 2020, b. Determine the net income that Flanagan Company reported for December 2020. c. Determine the owner's equity of Flanagan Company at December 31, 2020 ACTION PLAN . Remember the basic accounting equation assets must equal liabilities plus owner's equity. Review previous financial statements to determine how total assets, net income, and owner's equity are computed