Chapter 11, Problem 1QC

Quick Check

(Answers are given here)

The statement of cash flows is designed for all of the following purposes except

1. a. to list all revenues and expenses.
2. b. to determine a company’s ability to pay dividends and interest.
3. c. to predict future cash flows.
4. d. to provide information about cash receipts and cash payments during a period.

To determine

To identify: The purpose for which the statement of cash flows is not designed.

Answer to Problem 1QC

a. To list all revenues and expenses.

Explanation of Solution

Statement of cash flows:

This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. The statement of cash flow also determines the company’s ability to pay dividends and interest.

Thus option b, c, and d, are not correct answer as per the above explanation, only option a is correct answer as per above explanation.

Conclusion

Hence, the correct answer is option a.