Analysis of the changes in all of the noncash balance sheet accounts will explain the change in the cash account.

Question

Quizplus · Accepted Answer

This is true because all of the noncash balance sheet accounts (such as receivables, inventory, and accounts payable) are related to the cash account in some way. For example, an increase in accounts receivable means that customers owe the company more money, which could cause a decrease in cash if the company is not able to collect those funds in a timely manner. Therefore, analyzing the changes in noncash accounts can provide insights into why the cash account may have increased or decreased.

Analysis of the Changes in All of the Noncash Balance