The statement of cash flows and related disclosures would be of the least assistance in helping a potential investor assess
A) a firm's ability to generate cash.
B) a firm's ability to make good use of cash reserves to earn interest or other return.
C) a firm's ability to meet its obligations.
D) the reasons for differences between income and associated cash flows.

Question

Quizplus · Accepted Answer

The statement of cash flows primarily provides information on a company's cash inflows and outflows over a period of time. It can give insight into a company's ability to generate cash, meet its obligations, and explain the reasons for differences between income and cash flows. However, it does not specifically address a company's ability to earn interest or other returns on its cash reserves, making option B the least suitable for assessment through the statement of cash flows.

The Statement of Cash Flows and Related Disclosures Would Be