Why it is important to disclose non-cash transactions in cash flow?

Question

Why it is important to disclose non-cash transactions in cash flow?

Answer 1

A cash flow usually begins with Net Income.  Net income is effected by non-cash transactions so these need to be either added back or subtracted in order for the cash flow to reflect cash activity of the organization.

Type of non-cash transactions include depreciation and amortization which reduce the value of assets and are subtracted from net income.  These are added back to the cash flow since they are non-cash related.