ACCA Applied Knowledge · Business and Technology · Financial information provided by business
Which statement best describes the main purpose of the statement of cash flows?
The statement of cash flows shows how an entity generated and used cash during the period, classified into operating, investing and financing activities. It does not show accruals-based profit or market values; those come from other statements.
- ATo show the profit earned on an accruals basis
- BTo show the market value of the entity's assets
- CTo show how the entity generated and used cash during the periodCorrect
- DTo show the amounts owed to and by the entity at the year end
Explanation
The statement of cash flows reports cash inflows and outflows during a period, classified into operating, investing and financing activities. Profit on an accruals basis is in the statement of profit or loss, and amounts owed appear in the statement of financial position.
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