A projected cash flow statement shows future...

A projected cash flow statement shows future...

• A. Cash inflows and cash outflows
• B. Net income
• C. Assets and liabilities
• D. Equity contributions

Answer: (A)

This item focuses on cash movements over time. A projected cash flow statement shows future cash inflows and cash outflows, broken down by operating, investing, and financing activities, to reveal when cash will enter and leave the business. Why this is the best answer: the core purpose of a cash flow forecast is to map out expected cash receipts and payments so you can judge liquidity, plan for funding gaps, and ensure the business can meet obligations as they come due. Net income, by contrast, is an accrual-based measure that includes non-cash items and timing differences; it doesn’t directly show actual cash movements. Assets and liabilities are balance sheet items representing amounts at a point in time, not the flow of cash. Equity contributions affect financing but the forecast focuses on the timing of cash in and out, not just how capital is raised.

This item focuses on cash movements over time. A projected cash flow statement shows future cash inflows and cash outflows, broken down by operating, investing, and financing activities, to reveal when cash will enter and leave the business.

Why this is the best answer: the core purpose of a cash flow forecast is to map out expected cash receipts and payments so you can judge liquidity, plan for funding gaps, and ensure the business can meet obligations as they come due. Net income, by contrast, is an accrual-based measure that includes non-cash items and timing differences; it doesn’t directly show actual cash movements. Assets and liabilities are balance sheet items representing amounts at a point in time, not the flow of cash. Equity contributions affect financing but the forecast focuses on the timing of cash in and out, not just how capital is raised.