Statement of Cash Flows

What is a Statement of Cash Flows?

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Question

Which of the following best describes a statement of cash flows?

Answers

A. A statement of cash flows details the cash inflows and outflows that are related to a company's operating, investing, and financing activities over a period of time.

B. A statement of cash flows summarizes the financial position of a company at a given point in time.

C. A statement of cash flows measures a company's financial performance over a specified period of time.

D. A statement of cash flows reports changes over a period of time in component accounts that comprise the ownership of a firm.

E. None of these answers.

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Explanations

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A. B. C. D. E.

Under accrual accounting, net income does not typically equal net cash flow. While net income is important to identify, accrued income does not pay wages, payables, or dividends. Cash flows are important to identify since it is cash that repays loans, etc.

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