Which of the following is an acceptable basis for the preparation of the statement of cash flows?
A)The sum of cash, inventory, and money market accounts
B)The sum of cash and accounts receivable
C)Cash
D)The sum of cash and cash equivalents

Question

Quizplus · Accepted Answer

The statement of cash flows should only include cash and cash equivalents, which are highly liquid and can be easily converted into cash. It is important to exclude non-cash items, such as inventory and accounts receivable, as they do not represent cash inflows or outflows. The sum of cash and cash equivalents is the most appropriate basis for the preparation of the statement of cash flows.

Which of the Following Is an Acceptable Basis for the Preparation