Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
An income statement records only cash received.
False. It records revenue even when the revenue has not been received.
2.
Which of the following is not included in the statement of cash flow?
Managing activities. The statement of cash flow does not include this.
3.
Financing activities include stock and bond investments.
True. The financing section of the statement of cash flow records a companys investments.
4.
Why is depreciation added to net income when calculating a firms cash flow from operating activities?
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.
5.
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.
6.
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.
