Which of the Following Statements Is TRUE

question 56

Multiple Choice

Which of the following statements is TRUE?

• A) The Cash Flow Statement is for a point in time.
• B) The Cash Flow Statement is not required by generally accepted accounting principles.
• C) The Cash Flow Statement reports why cash increased or decreased during the accounting period.
• D) The Cash Flow Statement is a summary of all the transactions that affected Net Income.

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Definitions:

Accounting Estimates

Assumptions made about future financial transactions that impact the reporting of a company's financial statements, such as allowances for doubtful accounts.

Cumulative Adjustment

An accounting method used to make corrections to cumulative errors in financial statements of previous years.

Prior Period Adjustments

Corrections of errors in previously issued financial statements for periods that have already been reported.

Retained Earnings

The portion of a company's net income that is kept within the company rather than distributed to shareholders as dividends.