Asked by arielis reyes on May 04, 2024
Verified
The statement of cash flows
A) is prepared instead of an statement of income under ASPE.
B) is used to assess a company's ability to generate cash and the needs of the company in using the cash flows.
C) is prepared from a comparative statement of income.
D) reports basic earnings per share figures on a cash basis in the body of the statement.
Statement of Cash Flows
A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.
ASPE
Accounting Standards for Private Enterprises; a set of accounting standards for private companies in Canada, designed to meet the needs of private entities.
Comparative Statement of Income
A financial statement presenting a company's revenues, expenses, and profits over multiple periods for comparison purposes.
- Comprehend the importance of cash flow statements in assessing a corporation's financial health and ability to generate cash.
Verified Answer
AS
Aneeza ShabbirMay 09, 2024
Final Answer :
B
Explanation :
The statement of cash flows is used to assess a company's ability to generate future cash flows, to assess its ability to pay dividends and meet obligations, and for other needs such as to evaluate the reasons for differences between net income and net cash provided (used) by operating activities. It does not replace the income statement, is not prepared from a comparative statement of income alone (it also uses balance sheet data), and does not report earnings per share figures.
Learning Objectives
- Comprehend the importance of cash flow statements in assessing a corporation's financial health and ability to generate cash.