The statement of cash flows explains why net income as reported on the income statement does not equal the change in the cash balance.

Question

Quizplus · Accepted Answer

The statement of cash flows explains the sources and uses of cash during a period which can result in differences between the net income reported on the income statement and the change in the cash balance. These differences can occur due to non-cash transactions, such as depreciation, or changes in working capital accounts, such as accounts receivable or accounts payable.

The Statement of Cash Flows Explains Why Net Income as Reported