Q14-13RQ - Horngren'S Financial And Managerial Accounting

Question

Question: What should the net change in cash section of the statement of cash flows always reconcile with?

Step-by-Step Solution

Answer

Answer

 

The net change in cash section of the statement of cash flows always reconcile with the closing balance of the cash in the balance sheet.

 

Step 1: Net change in cash section of the statement of cash flows

The net increase or decrease in cash is calculated by combining the cash generated by or used for operating, investing, and financing activities.

Step 2: Reconciliation of net change in cash

The net change in the cash section of the statement of cash flows is always reconciled with the closing balance of the cash in the balance sheet. If the closing balance does not match that means there is some mistake in the preparation of a statement of cash flows.