The Statement of Cash Flows is prepared to show why the cash amount changed from the beginning of the period to the end of the period.

Question

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The Statement of Cash Flows provides an overview of changes in the cash position of a company during a specific period. It details the cash inflows and outflows during the period and explains how the cash amount changed from the beginning of the period to the end of the period. Therefore, the statement is prepared to show the reason behind the change in cash balance.

The Statement of Cash Flows Is Prepared to Show Why