On the statement of cash flows,the sum of the three major components (operating activities,investing activities,financing activities)adds up to
A)net income for the period.
B)the change in the cash account balance between the beginning and ending of the period.
C)the ending cash balance.
D)the amount of cash inflow for the period.

Question

Quizplus · Accepted Answer

The statement of cash flows shows the changes in the cash account balance between the beginning and ending of the period. The sum of the three major components (operating activities, investing activities, financing activities) reflects the sources and uses of cash that contributed to the change in the cash account balance. Therefore, the answer is B. The other choices are incorrect because they do not reflect the purpose of the statement of cash flows. Net income for the period appears on the income statement, not the statement of cash flows. Similarly, the ending cash balance is a result of the changes in cash flows, not the sum of the three major components. The amount of cash inflow for the period is a component of the statement of cash flows, but it does not reflect the full picture of the changes in cash account balance.

On the Statement of Cash Flows,the Sum of the Three