The statement of cash flows explains the difference between profit, as shown on the income statement, and the net cash flows generated from operating activities.

Question

Quizplus · Accepted Answer

The statement of cash flows reconciles the differences between profit or net income and the net cash flows generated from operating activities, investing activities, and financing activities. It provides information about the cash inflows and outflows during a specific period, which are not always reflected in the income statement.

The Statement of Cash Flows Explains the Difference Between Profit