Question

Which of the following statements are correct (Select all that apply):

Select one or more:

A. A balance sheet reports on investing and financing activities.

B. An income statement reports on financing activities.

C. The statement of equity reports on changes in the accounts that make up equity.

D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.

E. A balance sheet reports on a company's assets and liabilities over a period of time.

Answer 1

Option A, C and D is the correct answer. Balance sheet shows what a company owns in the form of assets and what it ows to others as liabilities. It also shows how much money is invested by owners under equity section. So option A is true statement.

Optikn B says that an income statement reports on financing activities which is false because income statement shows the revenue generated and all expenses during year which helps to know the net income during the period. So option B is false.

Option C says that statement of equity reports on changes in the accounts that make up equity which is a true statement. Because, it is a section which knows how much is owed to the owners by the company.

Option D says that statement of cash flows reports on cash flows from financing, investing and operating activities over a period of time which is a true statement because it helps to know how much cash inflow happened and how much outflow of cash occurred under each head. So option D is true.

Option E says that balance sheet reports on a company's assets and liabilities over a period of time which is false because balance sheet reports on a particular date and not over a period of time.

Hence, option A, C and D are correct statements.

SUMMARY:

Option A,C and D are correct statements.