Which Statement Is True

question 26

Multiple Choice

Which statement is true?

• A) The cash flow statement summarises the movements in the bank account over an accounting period.
• B) The cash flow statement explains the changes between the income statement and the balance sheet.
• C) The balance sheet links two income statements.
• D) None of the statements is true.

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Definitions:

Times Interest Earned Ratio

A financial metric assessing a company’s ability to meet its interest obligations from its operating income.

Income Tax Payments

Income tax payments are the amounts of money a company or individual must pay to the government, based on the income earned over a tax period.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debts.

Debt-To-Equity Ratio

The debt-to-equity ratio is a measure of financial leverage, indicating the proportion of company financing that comes from creditors and investors, calculated as total liabilities divided by shareholders' equity.