If a company has gaps between the change in cash and the net income for the year,
A)the income statement provides sufficient explanation for the sources of these changes.
B)the financial statement notes provide explanation for the sources of these changes.
C)the statement of cash flow provides explanation of the sources of these changes.
D)the statement of cash flow and balance sheet provide explanation for these changes.

Question

Quizplus · Accepted Answer

The statement of cash flow provides explanation of the sources of changes between cash and net income for the year. It shows the inflows and outflows of cash during the period, including operating, investing, and financing activities, which may not be reflected in the income statement alone. Therefore, it helps to identify the reasons for the gaps between net income and changes in cash.

If a Company Has Gaps Between the Change in Cash