alleryStart learning →What does the statement of cash flows summarize?
AThe value of the assets a firm owns
BThe money flowing into and out of a firm
CThe profit a firm earned during the year
DThe dividends a firm paid its stockholders
Answer & Solution
Correct answer: B. The money flowing into and out of a firm
1. The statement of cash flows is a summary of the money flowing into and out of a firm.
2. It assesses the sources and uses of cash during a period, typically one year, by tracking cash receipts and cash payments.
3. Assets are reported on the balance sheet and profit on the income statement, so neither is what this statement is built to show.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.6 The Statement of Cash Flows_
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