CIPS L4m4 Ethical And Responsible Sourcing · Free Practice Question Easy
Question 10
Which of the following financial documents would show whether a supplier has sufficient funds to pay their subcontractors in the short term?
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A
balance sheet
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B
ESG policy
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C
profit and loss account
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D
cash flow statement
Reveal correct answer
Correct answer: D
Explanation
A cash flow statement shows the money coming in and out. This would therefore show whether a supplier has enough money coming in, to be able to pay some of it out to a subcontractor.
P&L and Balance Sheets look more broadly at finances, rather than saying what's physically in the bank at a specific given time.
Do learn the difference between these three financial documents for the exam.
Balance Sheet: Explanation, Components, and Examples (investopedia.com)
Profit and Loss Statement Meaning, Importance, Types, and Examples (investopedia.com)
Cash Flow Statement: How to Read and Understand It (investopedia.com)
P.43
Discussion
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