The primary purpose of the statement of cash flows is to provide information
A) about an entity's operating, investing, and financing activities during a period.
B) that is useful in assessing cash flow prospects.
C) about an entity's cash receipts and cash payments during a period.
D) about an entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.

Question

Quizplus · Accepted Answer

The statement of cash flows provides information about an entity's cash receipts and cash payments during a period, including operating, investing, and financing activities. The purpose of the statement is to show the entity's sources and uses of cash, as well as any net increase or decrease in cash for the period. This information is important for stakeholders to assess an entity's liquidity and cash flow prospects. While the statement may also provide some information about an entity's ability to meet its obligations, pay dividends, and need for external financing, this is not its primary purpose.

The Primary Purpose of the Statement of Cash Flows Is