Because the statement of cash flows derives its information from the balance sheets of the firm, it can be referred to more formally as the statement of changes in net working capital.

Question

Quizplus · Accepted Answer

The statement of cash flows is a separate financial statement that reports a company's cash inflows and outflows during a specific period of time, as opposed to changes in net working capital. While the statement of cash flows may use information from the balance sheet, it is not the same as the statement of changes in net working capital.

Because the Statement of Cash Flows Derives Its Information from the Balance