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1.
The ABC Company has just bought 1 million shares of the XYZ Company. It will record this purchase as a cash outflow.
True. Because money left ABC to pay for the securities, the purchase is a cash outflow.
2.
The statement of cash flow records inflows and outflows of cash as soon as income is earned or expenses incurred.
False. It records income and expenses regardless of when they were earned or incurred.
3.
In the operating activities section of the statement of cash flow, you will find information on stock dividends paid.
False. The operating activities section of the statement of cash flow does not cover stock. It concerns itself only with cash flow related to production and sales.
4.
A firms production and sales cash flows are recorded in the _______ section of the statement of cash flow.
Operating. The operating section includes inflows and outflows of money related to production and sales.
5.
The statement of cash flow is divided into three sections. Which of the following is not one of those sections?
Cash flows from common stock issued. Common stocks do not have their own section.
6.
Creditors use statements of cash flow to keep track of their borrowers abilities to repay loans.
True. These statements keep them informed about where their borrowers money is going.
