The Cash Flow Statement Should Be Evaluated by Examining the Cash

question 40

Multiple Choice

The cash flow statement should be evaluated by examining the cash flow pattern suggested by the:

• A) subtotals of each of the three main sections.
• B) operating activities section since this section details the day to day operations of the business.
• C) change in cash regardless of which section had the biggest impact on the change.
• D) financing section since this section details how much debt the company has incurreD.
• Unlike the income statement, which summarizes its detailed information in one number (net income), the statement of cash flows does not provide a summary measure of cash flow performance. Instead, it must be evaluated in terms of the cash flow pattern suggested by the subtotals of each of the three main sections.

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