The statement of cash flows:
A) along with the balance sheet and income statement is prepared on the accrual basis.
B) along with the balance sheet and statement of retained earnings is dated as of a specific date.
C) along with the balance sheet is used to analyze liquidity.
D) ties the balance sheet to the statement of retained earnings.

Question

Quizplus · Accepted Answer

The statement of cash flows is used to analyze liquidity, as it provides information on a company's cash inflows and outflows during a specific period of time. The balance sheet and income statement are prepared on the accrual basis, and the statement of retained earnings is dated as of a specific date. The statement of cash flows does not tie the balance sheet to the statement of retained earnings.

The Statement of Cash Flows