The statement of cash flows helps measure how the changes in a balance sheet are financed between two time periods.

Question

Quizplus · Accepted Answer

The statement of cash flows shows how cash inflows and outflows have affected the company's cash balance, which in turn affects the balance sheet. By analyzing how the cash flow changes in different categories such as operating, investing, and financing activities, we can understand how the company has financed its changes in assets, liabilities, and equity between two time periods. Therefore, the statement of cash flows does help measure how the changes in a balance sheet are financed.

The Statement of Cash Flows Helps Measure How the Changes