The statement of cash flows
A)is prepared instead of an statement of income under ASPE.
B)is used to assess a company's ability to generate cash and the needs of the company in using the cash flows.
C)is prepared from a comparative statement of income.
D)reports basic earnings per share figures on a cash basis in the body of the statement.

Question

Quizplus · Accepted Answer

The statement of cash flows is used to assess a company's ability to generate future cash flows, to assess its ability to pay dividends and meet obligations, and for other needs such as to evaluate the reasons for differences between net income and net cash provided (used) by operating activities. It does not replace the income statement, is not prepared from a comparative statement of income alone (it also uses balance sheet data), and does not report earnings per share figures.

The Statement of Cash Flows