The statement of cash flows can be prepared using cash and cash equivalents rather than just cash, as its base.

Question

Quizplus · Accepted Answer

The statement of cash flows can be prepared using cash and cash equivalents, which includes not just cash in hand and cash in bank accounts, but also short-term investments that are highly liquid and easily convertible into cash. This broader definition of cash enables the statement of cash flows to provide a more accurate picture of a company's liquidity and ability to meet its short-term obligations.

The Statement of Cash Flows Can Be Prepared Using Cash