Asked by Linda MyPhuong on May 04, 2024
Verified
Which one of the following is false?
A) The statement of cash flows can be prepared using cash and cash equivalents rather than just cash, as its base.
B) The statement of cash flows reports the sources and uses of cash during a specific period.
C) The statement of cash flows shows the effects on net income of a company's operating, investing, and financing activities for an accounting period.
D) The statement of cash flows explains the difference between net income, as shown on the statement of income, and the net cash flows generated from operating activities.
Cash Equivalents
Short-term, highly liquid investments that are easily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
- Acquire insight into the purpose and description of the cash flow statement.
- Gain insight into how the statement of cash flows correlates with other financial reports.
Verified Answer
RH
Ramla HassanMay 08, 2024
Final Answer :
C
Explanation :
The statement of cash flows does not show the effects on net income of a company's operating, investing, and financing activities. Instead, it reports the cash inflows and outflows from these activities, which may not directly affect net income within the same accounting period.
Learning Objectives
- Acquire insight into the purpose and description of the cash flow statement.
- Gain insight into how the statement of cash flows correlates with other financial reports.