Analysis Intermediate: Understanding the Statement of Cash Flow

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1.
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.
2.
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.
3.
The statement of cash flow is divided into three sections. Which of the following is not one of those sections?
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Cash flows from common stock issued. Common stocks do not have their own section.
4.
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.
5.
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.
6.
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.