Shabaz and Tina have been tasked by their supervisor to audit the cash and cash equivalents accounts of Mercy

Enterprises, LLC$.$ Their supervisor has explained the importance of a firm's liquidity to them in order to highlight the

importance of the audit of these accounts. Shabaz wants to take a closer look at the clients operating, investing and

financing activities, and asks Tina if she has any suggestions on how this could be accomplished. Which of the following

would be Tina's best response?

The easiest thing to do would be to carefully examine the client's income statements. If you pay close

attention to the operating and non$-$operating sections, you should be able to see how the client is spending

money in these areas.

I would recommend taking a look at the client's statement of cash flows. This statement breaks down the

client's cash receipts and disbursements into these three areas and is prepared on the cash basis.

The best thing to do would be to analyze the last two balance sheets for the client. This will give you an idea

of how various current asset accounts have changed, which would speak to changes in their liquidity.

None of these answer choices are correct.