Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

A statement of cash flows explains the difference between the beginning and ending balances of which of the following accounts?

Retained earnings

Cash and cash equivalents

Total assets

Shareholders' equity

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Verified step by step guidance

Understand the purpose of the statement of cash flows: It is a financial statement that provides information about the cash inflows and outflows of a company during a specific period, explaining the changes in cash and cash equivalents.

Identify the key account related to the statement of cash flows: The statement focuses on the 'Cash and cash equivalents' account, as it tracks the movement of cash during the period.

Review the structure of the statement of cash flows: It is divided into three sections—operating activities, investing activities, and financing activities—that collectively explain the changes in cash and cash equivalents.

Clarify why other options are incorrect: Retained earnings, total assets, and shareholders' equity are not directly explained by the statement of cash flows. These accounts are addressed in other financial statements, such as the balance sheet or statement of retained earnings.

Conclude the relationship: The statement of cash flows reconciles the beginning and ending balances of cash and cash equivalents by detailing the sources and uses of cash during the period.