Question

Which of the following is correct about the statement of cash flows?

A. It provides information about a company’s cash receipts and cash payments during an accounting period.

B. It provides information about a company’s operating, investing, and financing activities during the period.

C. It provides information that investors and creditors can use to assess the company’s ability to generate positive future cash flows, ability to pay its liabilities, ability to pay dividends, and its need for additional financing.

D. It provides information to help management assess the business’s debt-paying ability, determine its dividend policy, and plan its investing and financing needs.

E. All of the above are correct.

Answer 1

Ansswer ) Option E All of the above are correct he aim of a cash flow statement should be to assist users: · to assess the company's ability to generate positive cash flows in the future · to assess its ability to meet its obligations to service loans, pay dividends etc · to assess the reasons for differences between reported and related cash flows · to assess the effect on its finances of major transactions in the year. The statement therefore shows changes in cash and cash equivalents rather than working capital.