Is cereal supposed to be cooked?
Packaged cereal such as corn flakes, raisin bran, or the Toasty O's in your picture is "ready-to-eat" — you can eat it dry, right out of the box if you wish, although many people enjoy adding some kind of milk (cows milk, soy milk, almond milk, etc.).

I don't think it would taste very good just mushed up with water. If that's all I had, I'd eat the cereal dry and drink the water separately — you can easily try it yourself and see what appeals to you.

Other cereals like oatmeal and wheat farina usually taste better when cooked, though you could eat dry oatmeal if you wanted.