All of the following are reasons that the statement of cash flows is useful to the analyst except:
A)The statement of cash flows shows how cash is generated during an accounting period and how it has been used.
B)A positive net income figure on the income statement is ultimately insignificant unless a company can translate its earnings into cash, and the only source in financial statements for learning about cash generation is the statement of cash flows.
C)The statement of cash flows shows the adjustments made to net income in order to calculate cash flow from operations; those should be examined to determine why cash flow from operations is negative or positive.
D)The statement of cash flows is the only financial statement that cannot be manipulated.

Question

Quizplus · Accepted Answer

The statement of cash flows can be manipulated to some extent, as companies may use accounting techniques to alter the presentation of cash flows. However, the statement is still a valuable tool for analyzing a company's cash flow situation. Therefore, option D, which suggests that the statement of cash flows is the only financial statement that cannot be manipulated, is incorrect.

All of the Following Are Reasons That the Statement of Cash