In preparing the statement of cash flows, determining the net increase or decrease to cash requires the use of
A) the adjusted trial balance.
B) the current period's retained earnings statement.
C) a comparative balance sheet.
D) a comparative income statement.

Question

Quizplus · Accepted Answer

In order to determine the net increase or decrease to cash, a comparative balance sheet is needed. This allows for a comparison of the cash balance at the beginning and end of the period, as well as changes in other balance sheet accounts that affect cash. The adjusted trial balance, retained earnings statement, and comparative income statement may be useful in preparing other financial statements, but they do not provide the specific information needed for the statement of cash flows.

In Preparing the Statement of Cash Flows, Determining the Net