The net increase (or decrease) in cash that is reported on the statement of cash ﬂows should be the same as the change in the balance of the cash account for the two most recent years on the comparative statements of ﬁnancial position.

Question

Quizplus · Accepted Answer

The statement of cash flows is prepared to show the net increase or decrease in cash for a particular period, while the balance sheet provides a snapshot of the financial position of a company at a specific date. However, the change in the balance of the cash account for the two most recent years on the comparative statements of financial position should be reflected in the net increase (or decrease) in cash reported on the statement of cash flows. Therefore, the statement is true.

The Net Increase (Or Decrease) in Cash That Is Reported