The cash flow statement should be evaluated by examining the cash flow pattern ______.Multiple choice question.financing section since this section details how much debt the company has incurredof the subtotals for the three sections of the statementoperating activities section since this section details the day to day operations of the businesschange in cash regardless of which section had the biggest impact on the change
Question
The cash flow statement should be evaluated by examining the cash flow pattern ______.Multiple choice question.financing section since this section details how much debt the company has incurredof the subtotals for the three sections of the statementoperating activities section since this section details the day to day operations of the businesschange in cash regardless of which section had the biggest impact on the change
Solution
The correct answer is: "operating activities section since this section details the day to day operations of the business".
This is because the operating activities section of the cash flow statement provides information about cash flows that are a direct result of daily operations like selling goods, providing services, paying salaries, etc. It gives the most accurate picture of the business's daily operations and how these operations are generating cash for the company. Therefore, it is the most important section to examine when evaluating the cash flow statement.
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