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Stocks 303: Understanding the Statement of Cash Flow

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1.
Financing activities include stock and bond investments.
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True. The financing section of the statement of cash flow records a companys investments.
2.
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.
3.
The statement of cash flow records inflows and outflows of cash as soon as income is earned or expenses incurred.
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False. It records income and expenses regardless of when they were earned or incurred.
4.
On a companys statement of cash flow, the sale of property is recorded as a ______.
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Cash inflow. It generates incoming cash.
5.
Why is depreciation added to net income when calculating a firms cash flow from operating activities?
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Cash is not paid out for it. Because the statement of cash flow records inflows and outflows of cash, depreciation must be added to net income, since it cannot be subtracted from it.
6.
Which of the following is not included in the statement of cash flow?
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Managing activities. The statement of cash flow does not include this.