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Stocks 303: Understanding the Statement of Cash Flow

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1.
A firms production and sales cash flows are recorded in the _______ section of the statement of cash flow.
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Operating. The operating section includes inflows and outflows of money related to production and sales.
2.
An income statement records only cash received.
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False. It records revenue even when the revenue has not been received.
3.
In a statement of cash flow, accounts receivable are listed in the section on cash flows from operating activities.
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True. Accounts receivable are operating activities.
4.
Creditors use statements of cash flow to keep track of their borrowers abilities to repay loans.
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True. These statements keep them informed about where their borrowers money is going.
5.
The ABC Company has just bought 1 million shares of the XYZ Company. It will record this purchase as a cash outflow.
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True. Because money left ABC to pay for the securities, the purchase is a cash outflow.
6.
The operating activities section of the statement of cash flow covers cash flows associated with _______.
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Production and sales. It concerns itself with the cash flows of making and selling the companys products or services.