One can prepare the statement of cash flows
A)by examining every transaction affecting the cash account, and classifying each one as an operating activity, investing activity, or financing activity.
B)using the T-account work sheet after the income statement and balance sheet have been prepared.
C)using the T-account work sheet before the income statement and balance sheet have been prepared.
D)by using both options a and b.
E)by none of the above.

Question

Quizplus · Accepted Answer

The statement of cash flows can be prepared by examining every transaction affecting the cash account and classifying each as an operating, investing, or financing activity (option A), and it can also be prepared using the T-account worksheet after the income statement and balance sheet have been prepared (option B). Both methods are valid approaches.

One Can Prepare the Statement of Cash Flows