Question

Which of the following is incorrect about the statement of cash flows?

Options

• It provides information about the cash receipt and cash payments of an enterprise.

• It reconciles ending cash balance with the balance as per bank statement.

• It provides information about the operating, investing and financing activities.

• It explains the deviation of cash from Earnings.

Answer 1

It reconciles ending cash balance with the balance as per bank statement.

Explanation:

The cash inflows and outflows from financing, investing, and operating activities are displayed in the Statement of Cash Flows, which also provides an explanation of the change in cash over time. That is done in a bank reconciliation statement, not the cash flow statement; therefore, it does not reconcile cash with the bank statement.