The cash flow statement was added to reporting requirements because it was believed that the income statement and statement of financial position didn't concentrate enough on
A)profitability.
B)liquidity.
C)depreciation.
D)bad debt.

Question

Quizplus · Accepted Answer

The cash flow statement provides information about the inflows and outflows of cash, which is important for assessing a company's liquidity - its ability to meet its short-term obligations. The income statement and statement of financial position focus more on profitability and the overall financial position of the company, respectively. Depreciation and bad debt are both typically included in the income statement, but they are not the primary reason for the addition of the cash flow statement.

The Cash Flow Statement Was Added to Reporting Requirements Because