Question

Which of the following statements about the statement of cash flows is not correct?

A)It does not replace the income statement.


B) It provides details as to how cash changed during a period.


C) It provides information about cash receipts and cash payments over a period of time.


D) It measures profitability.

Answer 1

The statement of cash flows does not measure profitability.

Step-by-step explanation:

The correct answer is D) It measures profitability.

The statement of cash flows is a financial statement that provides information about the cash receipts and cash payments of a company over a specific period of time. It categorizes cash flows into three sections: operating activities, investing activities, and financing activities.

The statement of cash flows does not measure profitability, which is the purpose of the income statement. The income statement shows the company's revenues, expenses, and net income or loss for a specific period of time.