A statement of cash flows reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year.

Question

Quizplus · Accepted Answer

A statement of cash flows reconciles the changes in cash and cash equivalents during a given year, not the change in retained earnings. The statement of retained earnings reconciles the net income earned and any dividends paid with the change in retained earnings.

A Statement of Cash Flows Reconciles the Net Income Earned