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The primary purpose of a statement of cash flows is to provide relevant information about:

a. Difference between net income and associated cash receipts and disbursements.

b. An entity’s ability to generate future positive net cash flows.

c. The cash receipts and disbursements of an entity during a period.

d. An entity’s ability to meet cash operating needs.

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Elin Hessel
Elin HesselLv2
27 Mar 2020
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Related questions

7. An appropriation of retained earnings by the board ofdirectors of a corporation for future plant expansion will resultin. Please explain

A.

A decrease in the total retained earnings presented on thebalance sheet.

B.

A decrease in cash on the balance sheet with an equal increasein the investments and funds section of the balance sheet.

C.

The establishment of a fund to help finance future plantexpansion.

D.

The disclosure that management does not intend to distribute, inthe form of dividends, assets equal to the amount of theappropriation.

8. The primary purpose of a statement of cash flows is toprovide relevant information about. Please explain

A.

Differences between net income and associated cash receipts anddisbursements.

B.

An entity’s ability to meet cash operating needs.

C.

An entity’s ability to generate future positive net cashflows.

D.

The cash receipts and cash disbursements of an entity during aperiod.

The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash disbursements of an enterprise during an accounting period. True or False?

Choose the correction answer

15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.

T F

16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.

T F

17. Anobjective of the statement of cash flows is to

a. disclose changes during the period in all assetand all equity accounts.

b. disclose the change in working capital during theperiod.

c. provide information about the operating,investing, and financing activities of an entity during aperiod.

d. None of these answers are correct.

18. Theprimary purpose of the statement of cash flows is to provideinformation

a. about the operating, investing, and financingactivities of an entity during a period.

b. that is useful in assessing future cash flowprospects.

c. about the cash receipts and cash payments of anentity during a period.

d. about the entity's ability to meet itsobligations and to pay dividends.

19. Cash equivalents are

a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.

b. investments with original maturities of threemonths or less.

c. readily convertible into known amounts ofcash.

d. All of these answers are correct.

20. Xanthe Corporation had the following transactions occur in thecurrent year:

1. Cash sale of merchandise inventory.

2. Sale of delivery truck at book value.

3. Sale of Xanthe common stock for cash.

4. Issuance of a note payable to a bank forcash.

5. Sale of a security held as anavailable-for-sale investment.

6. Collection of loan receivable.

How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?

a. Five items

b. Four items

c. Three items

d. Two items

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