Concept explainers
The purposes of the statement of
a. evaluate management decisions.
b. determine ability to pay debts and dividends.
c. predict future cash flows.
d. All of the above

Statement of cash flows
Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.
To Determine: The purpose of the statement of cash flows.
Answer to Problem 1QC
Explanation of Solution
Explanation for correct answers:
Purpose of statement of cash flows are given below:
- To predict future cash flows of the business,
- To determine the ability of the business to pay dividend and settle debts, finally
- To evaluate the management decision.
Hence, (d) is the correct option because all the stated purposes of statement of cash flows.
Explanation for incorrect answers:
- Option (a) is incorrect because evaluate management decision alone is not the purpose of statement of cash flows. Purpose of statement of cash flows refers to all the activities mentioned in options (a), (b), and (c).
- Option (b) is incorrect because determine ability to pay debt and dividend alone is not the purpose of statement of cash flows. Purpose of statement of cash flows refers to all the activities mentioned in options (a), (b), and (c).
- Option (c) is incorrect because predict future cash flows alone is not the purpose of statement of cash flows. Purpose of statement of cash flows refers to all the activities mentioned in options (a), (b), and (c).
Want to see more full solutions like this?
Chapter 14 Solutions
HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
- I am searching for the correct answer to this general accounting problem with proper accounting rules.arrow_forwardPlease explain the solution to this general accounting problem with accurate explanations.arrow_forwardI am searching for the accurate solution to this general accounting problem with the right approach.arrow_forward
- Please provide the accurate answer to this general accounting problem using appropriate methods.arrow_forwardI need help solving this general accounting question with the proper methodology.arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningIntermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub



