Concept explainers
Quick Check
(Answers are given here)
The statement of
- a. to list all revenues and expenses.
- b. to determine a company’s ability to pay dividends and interest.
- c. to predict future cash flows.
- d. to provide information about cash receipts and cash payments during a period.
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.
Hence, the correct answer is option a.
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Chapter 11 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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