A statement of cash flows is needed because:Group of answer choicesit enables users to understand more clearly the entity's sources and uses of cash.accrual-based financial statements are historic.accrual-based financial statements are not accurate.none of the options are true.
Question
A statement of cash flows is needed because:Group of answer choicesit enables users to understand more clearly the entity's sources and uses of cash.accrual-based financial statements are historic.accrual-based financial statements are not accurate.none of the options are true.
Solution
The statement of cash flows is needed because it enables users to understand more clearly the entity's sources and uses of cash. This statement provides information about a company's cash receipts and cash payments during an accounting period. It shows how these cash inflows and outflows link the ending cash balance to the beginning balance shown on the company's statement of financial position.
Accrual-based financial statements, while historic, are also accurate and provide a comprehensive view of a company's financial health. However, they do not provide detailed information about cash flow, which is why a statement of cash flows is necessary.
So, the correct answer is: "it enables users to understand more clearly the entity's sources and uses of cash."
Similar Questions
The statement of cash flows, provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilize those cash flowsGroup of answer choicesTrueFalse
The Statement of Cash Flows:Multiple Choiceis an optional financial statement.shows the change in the fair value of the company's common stock during the period.shows how cash changed during the period.shows the dividends that will be paid in the future.
The Statement of cash flows helps management, investors, creditors and other interested parties evaluate the following about the entity (choose all that apply):Group of answer choicesCash investing and financing transactions for the periodExplains the difference between profit and net cash provided (used) by operating activitiesAbility to pay share dividends and meet obligationsAbility to generate future cash flows
The statement of cash flows shows:Group of answer choicescash receipts and cash payments.the net worth of the entity.what the entity owns and owes.profitability.
The statement of cash flows is a financial statement that shows ______.
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