A purpose of the statement of cash flows may be which of the following?
A)The purpose of the statement of cash flows is to evaluate the decisions made by the board of directors.
B)The purpose of the statement of cash flows is to determine a company's ability to pay dividends to stockholders and interest and principle to its creditors.
C)The purpose of the statement of cash flows is to help predict the decisions of its managers.
D)The purpose of the statement of cash flows is to report the earnings per share

Question

Quizplus · Accepted Answer

The statement of cash flows is used to provide insight into a company's ability to generate cash, its sources and uses of cash, and its ability to meet financial obligations such as paying dividends and interest/principal to creditors. Therefore, option B is the most appropriate choice. Option A, C, and D do not accurately describe the purpose of the statement of cash flows.

A Purpose of the Statement of Cash Flows May Be