Analysis Intermediate: Understanding the Statement of Cash Flow

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
The investing activities section of the statement of cash flow records the buying of machinery.
Choose wisely. There is only one correct answer.
True. Buying equipment is considered an investment activity by a corporation.
2.
A firms production and sales cash flows are recorded in the _______ section of the statement of cash flow.
Choose wisely. There is only one correct answer.
Operating. The operating section includes inflows and outflows of money related to production and sales.
3.
In a statement of cash flow, accounts receivable are listed in the section on cash flows from operating activities.
Choose wisely. There is only one correct answer.
True. Accounts receivable are operating activities.
4.
In the operating activities section of the statement of cash flow, you will find information on stock dividends paid.
Choose wisely. There is only one correct answer.
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.
5.
Creditors use statements of cash flow to keep track of their borrowers abilities to repay loans.
Choose wisely. There is only one correct answer.
True. These statements keep them informed about where their borrowers money is going.
6.
The statement of cash flow records inflows and outflows of cash as soon as income is earned or expenses incurred.
Choose wisely. There is only one correct answer.
False. It records income and expenses regardless of when they were earned or incurred.