A statement of cash flows helps answer questions related to changes in the cash account, where the company spends and receives its cash.
What does a statement of cash flows do?
A statement of cash flows helps answer the following questions:
1. What explains the changes in the cash account?
- Ticked. This is correct. The statement of cash flows provides information on the sources and uses of cash, explaining changes in the cash account.
2. Where does a company spend its cash?
- Ticked. This is correct. The statement of cash flows breaks down the uses of cash, including operating activities, investing activities, and financing activities, providing insight into where the company spends its cash.
3. How does a company receive its cash?
- Ticked. This is correct. The statement of cash flows also reveals the sources of cash, including cash received from operating activities, financing activities, and investing activities.
4. What are the changes in the non-cash accounts?
- Not marked. This is incorrect. The statement of cash flows primarily focuses on changes in cash accounts, not non-cash accounts. Changes in non-cash accounts are typically covered in the income statement and balance sheet.
5. How can the company improve its operations?
- Not marked. This is not directly answered by the statement of cash flows. Suggestions for improving operations are generally derived from a more comprehensive analysis of various financial statements and operational metrics.
In summary, a statement of cash flows helps answer questions related to changes in the cash account, where the company spends and receives its cash, but it does not provide information on changes in non-cash accounts or specific recommendations for improving operations.
Complete question:
A statement of cash flows helps answer all of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) What explains the changes in the cash account? Where does a company spends its cash? How can the company improve its operations? | How does a company receives its cash? What are the changes in the non-cash accounts?