Question

[8] The primary purpose of a statement of cash flows is to provide relevant information about A. Differences between net income and associated cash receipts and disbursements. B. An entity’s ability to generate future positive net cash flows. C. The cash receipts and cash disbursements of an entity during a period. D. An entity’s ability to meet cash operating needs.

Answer 1

Answer: Option C

Explanation: Cash flow statement is a type of financial statement that is prepared by the accountant to analyze the sources and uses of cash in an accounting period.

This statement records all transactions of an entity involving exchange of cash. The transactions are further categorized as operating, investing and financing.

Thus, we can conclude that option C is correct.