The statement of cash flows should help investors and creditors assess each of the following except the
A) entity's ability to generate future income.
B) entity's ability to pay dividends.
C) reasons for the difference between net income and net cash provided by operating activities.
D) cash investing and financing transactions during the period.

Question

Quizplus · Accepted Answer

The statement of cash flows primarily provides information about a company's cash receipts and cash payments during a period, focusing on its operating, investing, and financing activities. It helps in assessing the entity's ability to generate cash and cash equivalents, thereby indicating its capacity to pay dividends, explaining differences between net income and net cash from operating activities, and detailing cash investing and financing transactions. However, directly assessing an entity's ability to generate future income involves more than just cash flow analysis, incorporating broader financial data and future-oriented information.

The Statement of Cash Flows Should Help Investors and Creditors