Ask Question
BusinessBusiness
11 January, 02:48

The principal purpose of a statement of cash flows is to measure the profitability of a business that maintains its accounting records on the cash basis. True or False True False

+5
Answers (2)
  1. 11 January, 02:56
    0
    Answer: False

    Explanation: The principal purpose of the statement of cash flows is to show where a firm's cash is being generated (inflow), and where its cash is being spent (outflow), over a specific period of time. These inflows and outflows are furthermore classed into operating, investing, and financing activities and are used by the investment community to determine the ability of a firm to generate cash, and then how the generated cash are spent. The statement of cash flows is essential in analyzing the liquidity and long-term solvency (ability to pay off debts) of a firm.
  2. 11 January, 03:12
    0
    False

    Explanation:

    The principal purpose of a statement of cash flows is to measure the profitability of a business that maintains its accounting records on the cash basis.

    This is False because cash flows are also made for businesses that accounting records on the accrual basis rather than cash basis.

    The cash flow is computed both by Direct and Indirect methods.

    In indirect method of Cash flow Net income is computed using accrual income which recognizes revenues when earned and expenses when incurred.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The principal purpose of a statement of cash flows is to measure the profitability of a business that maintains its accounting records on ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
In terms of workplace diversity, the new millenium has witnessed increased focus on
Answers (1)
In which of the following instances is the effect on equilibrium price (whether it rises, falls, or remains unchanged) dependent on the magnitude of the shifts in supply and demand?
Answers (1)
By the early 2000s, which country was Taiwan's third-largest trading partner? A. South Korea B. Japan C. United States D. China
Answers (1)
If a new home can be constructed for 120,000 what is the opportunity cost of federal defense spending assume a defense budget of 700 billion
Answers (1)
You are setting up a part-time business with an initial investment of $21,000. The unit cost of the product is $11.20, and the selling price is $18.70. (a) Find equations for the total cost C (in dollars) and total revenue R (in dollars) for x units.
Answers (1)
New Questions in Business
Macrosoft Company reports net income of $65,000. The accounting records reveal depreciation expense of $80,000 as well as increases in prepaid rent, accounts payable, and income tax payable of $60,000, $12,000, and $18,000, respectively.
No Answers
Hornberger, Inc. recently paid a dividend of $2.00 per share. The next dividend is expected to be $2.05 per share. Hornberger has a return on equity of 11.00%. What percentage of its earnings does Hornberger plow back into the firm?
Answers (1)
A tip of $10 is best for which kind of service? A. a mover who delivers furniture to your new home B. a valet who parks your car at a restaurant C. a waiter at a fast-food restaurant
Answers (2)
Sunland Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division.
Answers (1)
Adamson Company manufactures four lines of garden tools. As a result of an activity analysis, the accounting department has identified eight activity cost pools.
Answers (1)
Home » Business » The principal purpose of a statement of cash flows is to measure the profitability of a business that maintains its accounting records on the cash basis. True or False True False
Sign Up Forgot Password?