An objective of the statement of cash flows is to
A) disclose changes during the period in all asset and all equity accounts.
B) disclose the change in working capital during the period.
C) provide information about the operating, investing, and financing activities of an entity during a period.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

The statement of cash flows provides information about the operating, investing, and financing activities of an entity during a period, helping users of financial statements to understand the sources and uses of cash and to assess the entity's liquidity, solvency, and financial flexibility. Option A is incorrect because the statement of cash flows only concerns changes in cash and cash equivalents, not all asset and equity accounts. Option B is incorrect because the statement of cash flows may show changes in working capital indirectly (e.g., by presenting changes in accounts receivable, accounts payable, or inventory), but it is not its primary objective. Option D is incorrect because at least one of the other options is correct.

An Objective of the Statement of Cash Flows Is to