The statement of cash flows
A) is prepared instead of an income statement under generally accepted accounting principles.
B) is used to assess an entity's ability to pay dividends and meet obligations.
C) is prepared from comparative income statements.
D) reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

Question

Quizplus · Accepted Answer

The statement of cash flows is used to assess an entity's ability to pay dividends and meet obligations. It shows the cash flows from operating, investing, and financing activities for a period, which can be used to evaluate a company's liquidity and financial flexibility. It is prepared in addition to an income statement and provides important information about how cash is being generated and used by the entity. The other options are incorrect as the statement of cash flows is not prepared instead of an income statement, is not prepared from comparative income statements, and does not reflect earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

The Statement of Cash Flows