Question

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

a. Statements of cash flows
b. Balance sheets
c. Income statements
d. Statements of retained earnings

Answer 1

The first step in the preparation of the statement of cash flows requires the use of information included in balance sheets.

Step-by-step explanation:

The first step in the preparation of the statement of cash flows requires the use of information included in balance sheets.

The balance sheet provides the necessary data to calculate the changes in cash and cash equivalents for a specific period. It includes information on the company's assets, liabilities, and equity at a given point in time. By comparing the balance sheets from two different periods, the changes in cash can be determined.