What is the purpose of the statement of cash flows?

A To show net income

B To report cash receipts and payments from operating, investing, and financing activities

C To list all assets

D To calculate taxes

✓ Correct Answer: Option B

The cash flow statement shows how operations, investments, and financing affect cash during a period.

💡 Why is B) the correct answer?

The correct answer to the question "What is the purpose of the statement of cash flows?" is Option B: To report cash receipts and payments from operating, investing, and financing activities.

The other options — A) To show net income, C) To list all assets, D) To calculate taxes — are incorrect for this CPA Exam Prep question. As explained above: The cash flow statement shows how operations, investments, and financing affect cash during a period.

📚 About This CPA Exam Prep Practice Question

This 1-level CPA Exam Prep question from the Financial Accounting (FAR) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

Practice CPA Exam Prep Quizzes → Browse All Questions Study Flashcards

What is the purpose of the statement of cash flows?

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

Related CPA Exam Prep Questions