Question

What should the net change in cash section of the statement of cash flows always reconcile with?

A) The beginning and ending cash and cash equivalents balance on the balance sheet.
B) The net income reported on the income statement.
C) The total expenses reported in the operating activities section of the cash flow statement.
D) The total revenue reported in the investing activities section of the cash flow statement.

Answer 1

The net change in cash on the statement of cash flows reconciles with A) the beginning and ending cash and cash equivalents balance on the balance sheet, verifying all cash movements in the period.

Step-by-step explanation:

The net change in cash section of the statement of cash flows should always reconcile with the beginning and ending cash and cash equivalents balance on the balance sheet. This ensures that all cash movements have been accounted for, and it verifies the change in the cash balance from the start to the end of the reporting period as reflected on the balance sheet. Hence, the correct answer is A) The beginning and ending cash and cash equivalents balance on the balance sheet.

The net change in the cash section of the statement of cash flows should always reconcile with the beginning and ending cash and cash equivalents balance on the balance sheet. This is because the statement of cash flows provides details of the cash inflows and outflows during a specific period, which should result in the change in cash balances reflected on the balance sheet.