Question

Which of the following statements about the financial statements is correct? The “change in cash” reported...

Which of the following statements about the financial statements is correct?

The “change in cash” reported on the statement of cash flows is also reported on the statement of retained earnings.
The statement of cash flows and income statement are for a period of time while the balance sheet is at a point in time.
The statement of cash flows and income statement are at a point of time while the balance sheet is for a period of time.
None of these statements is correct.
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Answer #1

Correct statement : The statement of cash flows and income statement are for a period of time while the balance sheet is at a point in time. ( 2nd option )

Explanation :

• The statement of cash flows shows us the flow of cash during a particular period, for e.g. flow of cash during the financial year and income statement also shows us the profit earned or loss incurred during a particular period, for e.g. profit earned or loss incurred during the financial year.

• Balance sheet shows us the position of assets and liabilities at a particular point of time, for e.g. assets and liabilities as at the end of financial year.

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