The statement of cash flows is the only financial statement prepared on the cash basis of accounting rather than on the accrual basis of accounting.

Question

Quizplus · Accepted Answer

The statement of cash flows is prepared based on actual cash inflows and outflows during a specific period, rather than on accruals or other accounting adjustments. This makes it unique among the major financial statements, which are typically prepared on an accrual basis.

The Statement of Cash Flows Is the Only Financial Statement