BASIC FINANCIAL STATEMENT
Part 2 : Basic Financial Statement Analysis Question 1 - CIA 1192 P4 Q30 - Basic Financial Statement Analysis The management of ABC Corporation is analyzing the financial statements of XYZ Corporation because ABC is strongly considering purchasing a block of XYZ common stock that would give ABC significant influence over XYZ. Which financial statement should ABC primarily use to assess the amounts, timing, and uncertainty of future cash flows of XYZ Company? A. Income statement. B. Balance sheet. C. Statement of changes in stockholders' equity. D. Statement of cash flows. A. The income statement is prepared using accruals accounting and therefore does not provide information about cash flows. See the correct answer for a complete explanation. B. The balance sheet simply provides information about the amount of cash at the beginning and end of the year. It does not provide any information about the cash flows during the period. See the correct answer for a complete explanatio...