Nordic Exports Inc.reported net income of $150,000 for 2016, but its cash balance decreased $40,000.Which financial statement should Nordic Exports' management refer to for an explanation of this situation?
A) Balance Sheet
B) Income Statement
C) Statement of Retained Earnings
D) Statement of Cash Flows

Question

Quizplus · Accepted Answer

The statement of cash flows provides information on how a company's cash balance has changed over a period of time. In this case, Nordic Exports' management should refer to the statement of cash flows to see how the net income of $150,000 resulted in a decrease in their cash balance of $40,000.