Cash Flow Statement
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Questions and Answers

What do investing activities involve?

  • The acquisition and disposal of long-term assets and investments not classified as cash equivalents (correct)
  • The payment of employee salaries and wages
  • Short-term cash transactions
  • The generation of cash from operating activities

What is the primary purpose of cash flow from operating activities?

  • To preserve operating competence without relying on external financing (correct)
  • To distribute dividends to shareholders
  • To make investments in long-term assets
  • To obtain financing from external sources

What is the purpose of cash flow from investing activities?

  • To distribute dividends to shareholders
  • To generate cash from operating activities
  • To obtain financing from external sources
  • To make investments in long-term assets to generate profit in the future (correct)

Which of the following is an example of cash flow from operating activities?

<p>Cash payment to employees in the form of salary or wages (A)</p> Signup and view all the answers

What do financing activities involve?

<p>Changes in the scope and arrangement of the proprietors' capital and borrowings (D)</p> Signup and view all the answers

What is cash flow information frequently used as a pointer of?

<p>Amount, timing, and certainty of upcoming cash flows (D)</p> Signup and view all the answers

What does a cash flow statement describe?

<p>Inflows and outflows of cash and cash equivalents (C)</p> Signup and view all the answers

What do cash and cash equivalents include?

<p>Readily convertible, extremely liquid investments (C)</p> Signup and view all the answers

What is the effect of a transaction that increases cash?

<p>Inflow of cash (B)</p> Signup and view all the answers

What are operating activities?

<p>Foremost revenue constructing activities of the business (B)</p> Signup and view all the answers

What is cash flow a summary of?

<p>Modification in cash position among the dates of two balance sheets and revenue statements (B)</p> Signup and view all the answers

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