The statement of cash flows helps users understand the reasons for the differences between net income and related cash receipts and payments.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the sources and uses of cash during a particular period, including operating activities, investing activities, and financing activities. It provides information about cash inflows and outflows that may not be reflected in the income statement, such as changes in accounts receivable, inventory, and accounts payable. Therefore, it helps users understand the reasons for the differences between net income and related cash receipts and payments.

The Statement of Cash Flows Helps Users Understand the Reasons