Question

How is the statement of cash flows connected to the balance sheet?

A. The statement of cash flows shows changes in the asset and liability accounts to explain cash from operating activities
B. The changes in all revenue and expense accounts are calculated and then listed as cash inflows or outflows
C. The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash
D. Changes in asset accounts are recorded as operating activities, changes in liability accounts are recorded as financing activities and changes in equity accounts are recorded as investing activities.

Answer 1

Option C is correct one.

The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash

Step-by-step explanation:

• In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
• The purpose of the balance sheet is to reveal the financial status of a business as of a specific point in time. The statement shows what an entity owns (assets) and how much it owes (liabilities), as well as the amount invested in the business (equity).