The primary purpose of the statement of cash flows is to report which of the following?
A)profit earned and dividends paid during the period.
B)all inflows and outflows of cash during the period.
C)assets owned and claims against those assets at the end of the period.
D)liability changes made by the financial department of the company during the period.

Question

Quizplus · Accepted Answer

The primary purpose of the statement of cash flows is to report all inflows and outflows of cash during the period, and how it affects the company's liquidity and cash position. It shows the sources of cash, such as operating cash flows, investing cash flows, and financing cash flows, and how they were used or distributed during the reporting period. The statement of cash flows helps investors and analysts to assess the company's ability to generate cash, meet its obligations, and finance its growth. The statement of cash flows does not report profit earned, dividend paid, or changes in assets and liabilities directly; those are reported in the income statement and balance sheet, respectively.

The Primary Purpose of the Statement of Cash Flows Is