Question

The classification of an item as a cash equivalent means that changes in the balance: a....

The classification of an item as a cash equivalent means that changes in the balance:

a. will be disclosed in the statement of cash flows.

b. will not be disclosed in the statement of cash flows.

c. may be disclosed at discretion of the entity.

d. all of the above

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Answer #1

a. will be disclosed in the statement of cash flows.

The statement of cash flows summarizes the amount of cash and cash equivalents entering and leaving a company during a financial/fiscal year, that is it describes the cash flows into and out of the organization.Cash flow statement is a part of financial statement.

Therefore the classification of an item as a cash equivalent means that changes in the balance definitely will be disclosed in the statement of cash flows.

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Hope you understood.

Thank you.

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