The Main Purpose of the Statement of Cash Flows Is

question 71

Multiple Choice

The main purpose of the Statement of Cash Flows is:

• A) to determine the change in cash for the period.
• B) to disclose information about cash receipts and disbursements during the period.
• C) to disclose the changes in long-term asset and liability accounts during the period.
• D) to disclose significant noncash investing and financing activities during the period.
• E) to explain why net income and net operating cash flows are different.

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Definitions:

Depreciation Estimates

Projections made regarding the decrease in value of a fixed asset over time, affecting financial statements and tax liabilities.

Residual Value

The anticipated worth of an asset upon reaching the conclusion of its serviceable life.

Double-Declining-Balance

An accelerated method of depreciation which doubles the regular depreciation amount, reducing the value of an asset more quickly in its early years.

Depreciation Expense

The orderly apportionment of a tangible asset's cost over the duration of its use.