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The purposes of the statement of cash flows are to a. evaluate management decisions. b. determine...

Question:

The purposes of the statement of cash flows are to

a. evaluate management decisions.

b. determine ability to pay debts and dividends.

c. predict future cash flows.

d. All of the above

Financial Statements:

In general, there are three different types of financial statements: 1) the income statement, 2) the balance sheet, 3) and the cash flow statement. Each one provides investors with critical financial information about the performance of the company. Financial statements are published on both a quarterly and annual basis.

Answer and Explanation:

The answer is: d. All of the above. The cash flow statement allows investors to: evaluate management's decisions, determine whether or not the company has the ability to pay off debts and/or dividends, and can even help to predict future cash flows. This is because it provides investors with an overview of the sources and uses of cash flows throughout the accounting period.


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Using the Statement of Cash Flows for Decision Making

from Accounting 101: Financial Accounting

Chapter 12 / Lesson 5
7.6K

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