Which of the following best describes the purpose of the cash flow statement?
A) To identify the cash balance at the end of the year
B) To report the inflows and outflows of cash
C) To balance current period revenues with those of the previous period
D) To report assets, liabilities and owners' equity as of a specific date

Question

Quizplus · Accepted Answer

The purpose of the cash flow statement is to report the inflows and outflows of cash, providing insight into a company's liquidity and ability to meet financial obligations. The cash balance at the end of the year is included in the statement, but is not the primary purpose. Balancing current period revenues with those of the previous period is the purpose of the income statement, while the balance sheet reports assets, liabilities and owners' equity as of a specific date.

Which of the Following Best Describes the Purpose of the Cash