Given the following partial information from the comparative balance sheet of Levi Corporation, which financial statement would most likely use this information to determine the change in cash during the period?\begin{align*}\text{Assets (beginning of year):} & \quad \$120,000 \\\text{Assets (end of year):} & \quad \$135,000 \\\text{Liabilities (beginning of year):} & \quad \$50,000 \\\text{Liabilities (end of year):} & \quad \$60,000 \end{align*}

• A. Income Statement
• B. Notes to the Financial Statements
• C. Statement of Retained Earnings
• D. Statement of Cash Flows

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the purpose of the Statement of Cash Flows. It is used to analyze the changes in cash during a specific period by categorizing cash flows into operating, investing, and financing activities.
2. Step 2: Recognize that the comparative balance sheet provides information about changes in assets and liabilities over time, which are essential for determining cash flow changes.
3. Step 3: Note that the Income Statement, Notes to the Financial Statements, and Statement of Retained Earnings do not directly focus on cash flow changes. The Income Statement focuses on revenues and expenses, the Notes provide additional disclosures, and the Statement of Retained Earnings tracks changes in equity.
4. Step 4: Identify that the Statement of Cash Flows uses data from the comparative balance sheet to calculate cash inflows and outflows, such as changes in working capital (current assets and liabilities).
5. Step 5: Conclude that the Statement of Cash Flows is the financial statement most relevant for determining the change in cash during the period, as it directly incorporates changes in assets and liabilities from the balance sheet.