The statement of cash flows and the statement of financial position are interrelated because:
A) both disclose the corporation's profit.
B) the ending amount of cash on the statement of cash flows must agree with the amount in the statement of financial position.
C) the ending amount of cash on the statement of cash flows must agree with the amount on the income statement.
D) the ending amount of cash on the statement of cash flows must agree with the amount in the statement of changes in equity.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the sources and uses of cash during a specific period, while the statement of financial position shows the assets, liabilities, and equity of the company at a specific point in time. The ending cash balance on the statement of cash flows should agree with the cash balance reported on the statement of financial position. This is because the cash balance is an important part of the company's financial position, and any changes in cash during the period should be reflected in the financial position. Therefore, the two statements are interrelated, and the ending cash balance must be consistent between the two. Option A is incorrect because while the financial position and cash flows statements may disclose profit indicators, profit is not the focus of these statements. Option C is incorrect because the ending amount of cash on the statement of cash flows is not related to the amount on the income statement. Option D is incorrect because the ending amount of cash on the statement of cash flows is not related to the statement of changes in equity.

The Statement of Cash Flows and the Statement of Financial