Current Attempt in Progress For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both. <\/p>\n\n\n\n
True <\/p>\n\n\n\n
False<\/p>\n\n\n\n
The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n The correct answer is False<\/strong>.<\/p>\n\n\n\n For external reporting, companies are required to prepare both<\/strong> an income statement and a statement of cash flows, along with other financial statements like the balance sheet and statement of shareholders\u2019 equity.<\/p>\n\n\n\n Companies must prepare both<\/strong> an income statement and a statement of cash flows for external reporting. They are distinct but equally important financial statements that together give a comprehensive view of a company\u2019s financial health.<\/p>\n","protected":false},"excerpt":{"rendered":" Current Attempt in Progress For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both. True False The correct answer and explanation is: The correct answer is False. Explanation: For external reporting, companies are required to prepare both an income statement and a statement of cash […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-22331","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=22331"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22331\/revisions"}],"predecessor-version":[{"id":22332,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22331\/revisions\/22332"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=22331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=22331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=22331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\n\n\nExplanation:<\/h3>\n\n\n\n
\n
This financial statement shows a company\u2019s financial performance over a specific period. It summarizes revenues, expenses, gains, and losses to arrive at net income or net loss. It helps stakeholders understand how profitable the company was during that period.<\/li>\n\n\n\n
This statement reports the actual cash inflows and outflows during the same period. It breaks down cash activities into three categories:
\n\n\n\nWhy Both Are Required:<\/h3>\n\n\n\n
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The income statement reports profitability, while the cash flow statement reports liquidity and cash management. A company could show a profit but still have poor cash flow, which might indicate financial trouble.<\/li>\n\n\n\n
Accounting standards, such as U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards), require both statements to be prepared for external users. This ensures transparency and a complete financial picture.<\/li>\n\n\n\n
Investors, creditors, analysts, and other stakeholders rely on both reports to make informed decisions. The income statement alone doesn\u2019t provide sufficient detail about cash availability or how cash is generated and spent.<\/li>\n<\/ul>\n\n\n\n
\n\n\n\nSummary:<\/h3>\n\n\n\n