A statement of cash flows is not intended to assist investors in evaluating:
A) Reasons for differences between the amount of profit for the year and net cash from operations.
B) The company's ability to meet its obligations and to pay dividends.
C) Non-cash aspects of investing and financing activities.
D) The profitability of business operations.

Question

Quizplus · Accepted Answer

While a statement of cash flows provides information on the company's cash inflows and outflows, it is not intended to evaluate the profitability of business operations. This is because profitability is better assessed through the income statement, which takes into account non-cash items such as depreciation and amortization.

A Statement of Cash Flows Is Not Intended to Assist