The cash flow statement explains why a firm's cash position has changed between successive balance sheet dates while simultaneously explaining the changes that have taken place in the firm's noncash asset,liability,and stockholders' equity accounts over the same period.

Question

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The cash flow statement shows the sources and uses of cash during a specified period of time, and it reconciles the beginning and ending cash balances on the balance sheet. It also explains the changes in noncash accounts, such as accounts receivable, accounts payable, and inventory, that affect cash flow. Therefore, the statement explains why a firm's cash position has changed between successive balance sheet dates while simultaneously explaining the changes that have taken place in the firm's noncash asset, liability, and stockholders' equity accounts over the same period.

The Cash Flow Statement Explains Why a Firm's Cash Position