What is the primary purpose of a company's statement of cash flows?
A)to provide information about the company's operations
B)to provide information about the company's dividend policy
C)to provide information about the company's financing and investing activities
D)to provide information about the company's cash receipts and cash payments during the period

Question

Quizplus · Accepted Answer

The primary purpose of a company's statement of cash flows is to provide information about the company's cash receipts and cash payments during the period. It shows how much money was generated by operations, how much was spent on investments, and how much was used to pay off debts or distribute to shareholders. It helps investors and analysts to understand the company's liquidity, solvency, and ability to generate cash. Therefore, option A, B, and C are incorrect.

What Is the Primary Purpose of a Company's Statement of Cash