The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

Question

Quizplus · Accepted Answer

The statement of cash flows is based on the principle that the change in the cash balance over a period is due to the cash inflows and outflows from operating, investing, and financing activities, not directly equal to the change in total liabilities and stockholders' equity.

The Statement of Cash Flows Relies on a Fundamental Principle