Should the ending cash balance on the Statement of Cash Flows always match the cash balance reported on the Balance Sheet?

Should the ending cash balance on the Statement of Cash Flows always match the cash balance reported on the Balance Sheet?

• A. True
• B. Not necessarily
• C. False
• D. Cannot be determined

Answer: (C)

The main idea is that the ending cash balance on the cash flow statement and the cash balance on the balance sheet are related but not necessarily the same in all presentations. The cash flow statement ends with the cash and cash equivalents available during the period, while the balance sheet shows the cash position at a specific date. Some companies report restricted cash separately on the balance sheet or classify cash and cash equivalents differently. If restricted cash is not included in the cash and cash equivalents line on the balance sheet, or if presentation differences exist, the numbers may not match exactly. Because of these possible presentation differences, the ending cash balance on the cash flow statement does not always align perfectly with the cash balance reported on the balance sheet.

The main idea is that the ending cash balance on the cash flow statement and the cash balance on the balance sheet are related but not necessarily the same in all presentations. The cash flow statement ends with the cash and cash equivalents available during the period, while the balance sheet shows the cash position at a specific date. Some companies report restricted cash separately on the balance sheet or classify cash and cash equivalents differently. If restricted cash is not included in the cash and cash equivalents line on the balance sheet, or if presentation differences exist, the numbers may not match exactly. Because of these possible presentation differences, the ending cash balance on the cash flow statement does not always align perfectly with the cash balance reported on the balance sheet.