Which of the following statements accurately describes the cash flow statement?
A) It shows the relative proportion of debt and assets.
B) It shows the link between accrual based income and the cash reported on the balance sheet.
C) It indicates when long-term debt will mature.
D) It shows the link between book income and earnings per share.

Question

Quizplus · Accepted Answer

The cash flow statement shows how cash is generated and used in a company, providing a link between accrual based income (as reported on the income statement) and the cash reported on the balance sheet. It does not show the proportion of debt and assets (that would be shown on the balance sheet), indicate when long-term debt will mature (that would be shown in the notes to the financial statements), or show the link between book income and earnings per share (those are shown on the income statement).

Which of the Following Statements Accurately Describes the Cash Flow