The primary purpose of the statement of cash flows is to report

Question

Quizplus · Accepted Answer

The statement of cash flows presents the inflows and outflows of cash and cash equivalents for an accounting period. It reports on the sources and uses of cash, including operating, investing, and financing activities. The primary purpose of the statement of cash flows is to provide relevant and reliable information about cash receipts and cash payments of a company, which can help stakeholders to evaluate a company's liquidity, solvency, and financial flexibility. Although the statement of cash flows indirectly reports on financing and investing transactions, these transactions are not the primary focus of the statement. Furthermore, the statement of cash flows reports on the net increase or decrease in cash, but this is not the primary purpose of the statement.

The Primary Purpose of the Statement of Cash Flows Is