The statement of cash flows is designed to fulfill all the following purposes EXCEPT to:
A)show the relationship of net income to changes in the company's cash.
B)assess the collectability of accounts receivable.
C)evaluate management decisions.
D)help predict future cash flows.

Question

Quizplus · Accepted Answer

The statement of cash flows is not designed to assess the collectability of accounts receivable. Its main purpose is to show the inflows and outflows of cash during a specific period and to provide insight into the company's liquidity, financial flexibility, and solvency. Therefore, Choice B is the correct answer. The other options are valid purposes of the statement of cash flows, as it helps stakeholders evaluate management decisions, predict future cash flows, and understand the relationship between net income and changes in the company's cash.

The Statement of Cash Flows Is Designed to Fulfill All