In the statement of cash flows, net cash flows from operating activities plus net cash flows from investing activities plus net cash flows from financing activities for the period equal:Group of answer choicesthe cash balance at the beginning of the period.total net increase or decrease in cash held for the period.the cash balance at the end of the period.operating profit.
Question
In the statement of cash flows, net cash flows from operating activities plus net cash flows from investing activities plus net cash flows from financing activities for the period equal:Group of answer choicesthe cash balance at the beginning of the period.total net increase or decrease in cash held for the period.the cash balance at the end of the period.operating profit.
Solution
The correct answer is: total net increase or decrease in cash held for the period.
Here's a step-by-step explanation:
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The statement of cash flows is divided into three sections: operating activities, investing activities, and financing activities. Each section shows the net cash inflows and outflows for those activities during the period.
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When you add up the net cash flows from operating activities, investing activities, and financing activities, you get the total net increase or decrease in cash for the period.
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This total net increase or decrease in cash is then added to the cash balance at the beginning of the period to arrive at the cash balance at the end of the period.
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Therefore, the statement that "net cash flows from operating activities plus net cash flows from investing activities plus net cash flows from financing activities for the period equal total net increase or decrease in cash held for the period" is correct. It does not equal the cash balance at the beginning or end of the period, nor does it equal operating profit.
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