The cash flows statement provides a link between two balance sheets by showing how net income (or loss) has changed owners' equity from one balance sheet date to the next.

Question

Quizplus · Accepted Answer

The cash flow statement shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities, rather than directly linking net income to changes in owners' equity.

The Cash Flows Statement Provides a Link Between Two Balance