3. Which of the following is NOT an issue that prevents reliance on the statement of cash flows incalculating free cash flows?a. The Statement of Cash Flows may be manipulated because GAAP allows managers discretion onwhen to record cash transactionsb. On Statement of Cash Flows, Allocation of taxes between operating and financial activities isignoredc. Significant non-cash transactions are omitted which may be part operational and part financial(for example purchasing an asset with a loan)d. On Statement of Cash Flows, Interest expense is left in operating sectione. On the statement of Cash Flows, the operating section is not purely related to operating activities

free cash flow are refers to the the cash that is really available with the company in order to meet…

Answered: 3. Which of the following is NOT an…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 1MC: Which of the following statements is false? A. Noncash activities should be reported in accrual...

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Similar questions

Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin a. I, II, III, and IV b. I, II, and III c. I and IV only d. II and III only
The payback period method is inferior to the net present value method because it ________. is difficult to compute Deals with accounting income rather than cash flows Fails to consider cash flows beyond the payback period
Which of the following statements regarding the statement of cash flows is false?A. The statement of cash flow separates cash inflow and outflows into three major categories: operating, investing and financingB. The ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet at the end of the same periodC. The total increase or decrease in cash shown on the statement of cash flows must agree with the bottom line (net income or net loss) reported on the income statementD. The statement of cash flows covers a period of time
Which one of the following statements best describes a cash outflow in relation to the statement of cash flows? A: A cash outflow is an expense. B: A cash outflow may have been paid or not. C: A cash outflow is associated to both revenue and capital expenditure. D: None of the above
Which of the following statements about accruals is true? Select one: A. All accrual accounting adjustments are value irrelevant B. Accrual income is less relevant than cash flow C. Accruals cannot be manipulated D. Accruals are less reliable than cash flows
Which of the following returns is consistent with contractual cash flows that are SPPI? Return for passage of time. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Return for amounts to cover expenses and a profit margin. Group of answer choices I, II and III only I and IV only I, II, III and IV II and III only
How to treat interest expense when preparing a Statement of Cash flows? Interest paid is reported as a cash outflow in the operating activities section on the statement of cash flows prepared under the indirect method. Answer: False. But why?
Explain your answer And do not give plagiarism answer
Using the indirect method for preparing the statement of cash flows, which of the following would not be included as an adjustment to net income? A decrease in Prepaid Insurance. An increase in Accounts Payable. An increase in Equipment. An increase in Accounts Receivable. None of the answer choices is correct. → Question 23 Which of the following is not an advantage of using the indirect method to prepare the statement of cash flows? The indirect method provides a link between net income and cash flows from operating activities by reconciling the two amounts. The indirect method typically takes less time to prepare than the direct method.. Accounting systems are better suited to generate information needed for the indirect method. The indirect method is more accurate than the direct method. None of the answer choices is correct.
Using the following answer keys, you are to identify in which activity each of the transactions is classified and its effect on cash flows. Cash Flow Classification.using the capital letter only: O.Operating Activity .Investing Activity F.Financing Activity Ol.Operating and Investing Activity • .Noncash Transaction Effect on Cash Flows.using the capital letter only: • .Increase D.Decrease N..No Effect Transaction Cash Flow Classification Effect on Cash Flows Increased accounts payable. Decreased inventory. Increased prepaid insurance. Earned a net income. Issued stock for cash. Retired long-term debt by issuing stock. Purchased a long-term investment with cash. Decreased interest payable. Decreased dividends receivable. Converted bonds to common stock.
If the indirect method is used to calculate net cash provided by operating activities, adecrease in accounts receivable isa. added to net income.b. subtracted from net income.c. ignored since it does not affect net income.d. ignored since it does not affect expenses.
When calculating the cash flows from operating activities which of thefollowing statements is true?a) The tax paid should be deductedb) The interest payable should be deductedc) The tax paid should be addedd) None of the above

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