Nordic Exports Inc.reported net income of $150,000 for 2015, but its cash balance decreased $40,000.Which financial statement should Nordic Exports' management refer to for an explanation of this situation?
A)Balance Sheet
B)Income Statement
C)Statement of Retained Earnings
D)Statement of Cash Flows

Question

Quizplus · Accepted Answer

The Statement of Cash Flows shows the inflows and outflows of cash and provides an explanation for changes in cash balance. Therefore, Nordic Exports' management should refer to the Statement of Cash Flows to understand why the cash balance decreased despite reporting net income.