The third (final) step in preparing the statement of cash flows is to
A) analyze changes in non-current asset and liability accounts.
B) compare the net change in cash with the change in the cash account reported on the statement of financial position.
C) determine net cash provided by operating activities.
D) list the non-cash activities.

Question

Quizplus · Accepted Answer

The third step in preparing the statement of cash flows is to compare the net change in cash with the change in the cash account reported on the statement of financial position. This helps ensure accuracy and completeness in the statement of cash flows. The other options are steps one (analyze changes in non-current asset and liability accounts) and two (determine net cash provided by operating activities) in preparing the statement of cash flows, respectively. Option D is not a step in preparing the statement of cash flows, but rather a required disclosure within the statement itself.

The Third (Final) Step in Preparing the Statement of Cash