The statement of cash flows enables financial statement users to do all of the following except ________.
A)assess an entity's ability to pay liabilities and dividends
B)determine the extent to which an entity will require external financing
C)assess the collectibility of existing accounts receivable
D)reconcile differences between net income and the associated cash receipts and payments

Question

Quizplus · Accepted Answer

The statement of cash flows provides information on an entity's cash inflows and outflows from operating, investing, and financing activities. While it does provide information on an entity's ability to pay liabilities and dividends, determine the extent of external financing needed, and reconcile differences between net income and cash receipts and payments, it does not specifically assess the collectibility of existing accounts receivable. However, the statement of cash flows may indirectly provide some insight into the collectibility of accounts receivable by showing changes in accounts receivable balances over time.

The Statement of Cash Flows Enables Financial Statement Users to Do