Question

Which of the following statements accurately describes the statement of cash flows?A) It is the link between net income and earnings per share.B) It shows the relative proportion of debt and assets.C) It indicates when long-term debt will mature.D) It is the link between the accrual-based income statement and the cash reported on thebalance sheet.

Answer 1

Answer:

D) It is the link between the accrual-based income statement and the cash reported on the balance sheet.

Explanation:

As, for cash flow statement, it best describes the net cash used or provided by current year business transactions, and not just the accrual income sources.

Therefore, it performs a kind of reconciliation between accrual income and cash basis of income.

It depicts transactions in three categories - Operating, Investing and Financing Activities.

Therefore, from all the stated statements

Statement D is true.