Which of the following information can be obtained from a statement of cash flows but is not obvious from looking at financial statements prepared on an accrual basis?
A) Whether the entity is collecting its receivables in a timely manner.
B) Whether the entity is generating cash from its operations.
C) Whether the entity is likely to be able to pay its debts as and when they fall due.
D) All the above options are true.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the actual cash inflow and outflow for the period, which can provide insights into the entity's ability to collect receivables, generate cash from operations, and meet its debts obligations. These cannot be determined from financial statements prepared on an accrual basis, which only show the timing of revenue and expense recognition.

Which of the Following Information Can Be Obtained from a Statement