The statement of cash flows is designed to assist users in assessing each of the following, except:
A) The ability of a company to remain liquid.
B) The major sources of cash receipts during the period.
C) The company's profitability.
D) The reasons why net cash flow from operating activities differ from net income.

Question

Quizplus · Accepted Answer

The statement of cash flows is not designed to assess the company's profitability. Its purpose is to provide information about the sources and uses of cash during a specific period, including operating, investing, and financing activities, and to explain any differences between cash flow and net income. The statement of cash flows is important for evaluating a company's liquidity and ability to meet its financial obligations.

The Statement of Cash Flows Is Designed to Assist Users