The statement of cash flows reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year.

Question

Quizplus · Accepted Answer

The statement of cash flows reconciles the net cash provided by operating activities, investing activities, and financing activities with the change in cash and cash equivalents between the start and end of the year. It does not directly reconcile net income and dividends with the change in retained earnings. However, changes in retained earnings can be indirectly affected by the cash flows from these activities.

The Statement of Cash Flows Reconciles the Net Income Earned