The statement of cash ﬂows is the only ﬁnancial statement prepared on the cash basis of accounting rather than on the accrual basis of accounting.

Question

Quizplus · Accepted Answer

The statement of cash flows is prepared on the cash basis of accounting, which tracks the actual cash flow in and out of a business, rather than the accrual basis of accounting, which records revenue and expenses as they are earned or incurred, regardless of when the money is actually exchanged. The other financial statements, such as the income statement and balance sheet, are prepared on the accrual basis of accounting.

The Statement of Cash ﬂOws Is the Only ﬁNancial Statement