In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of
A)the adjusted trial balance.
B)the current period's statement of retained earnings.
C)a comparative statement of financial position.
D)a comparative income statement.

Question

Quizplus · Accepted Answer

The comparative statement of financial position, also known as the balance sheet, provides information on the beginning and ending balances of cash and cash equivalents. The net increase or decrease in cash is calculated by comparing the ending balance of cash and cash equivalents in the current period with the beginning balance in the prior period. The adjusted trial balance and the comparative income statement are not used specifically for this calculation. The current period's statement of retained earnings shows changes in retained earnings, but does not provide direct information on cash flows.

In Preparing the Statement of Cash Flows, Determining the Net