The primary purpose of the statement of cash flows is to provide information about the investing and financing activities during a period. facilitate banking relationships. provide information about the cash receipts and cash payments during a period. prove that revenues exceed expenses if there is a net income.

The primary purpose of the statement of cash flows is to provide information about the investing and financing activities during a period. facilitate banking relationships. provide information about the cash receipts and cash payments during a period. prove that revenues exceed expenses if there is a net income.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Listed below are several transactions. For each transaction, indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F), or noncash (NC) activity. Also, indicate whether the transaction is a cash inflow (CI) or cash outflow (CO), or has no effect on cash (NE). The first answer is provided as an example.
On the statement of cash flows, which of the following items is classified as a financingactivity?a. Borrowing cash by signing a long-term noteb. Purchasing investments with cashc. Acquiring long-term assets with cashd. Loaning money with a short-term note receivable
What accounts on the balance sheet must be evaluated when completing the financing activities section of the statement of cash flows?
Which of the following is reported under the Financing Activities in the Statement of Cash Flow? O Collection of account receivable O Cash payment to suppliers Issuance of bonds payable O Sale of building
Discuss the importance of reporting the transactions of cash flows in the correct period for a cash based business.
Where are cash equivalents disclosed in the financial statements?The _____________ account on the balance sheet. A.) Accounts Recievable B.) Cash C.) Expenses D.) Merchandise Inventory E.) Sales
Select the item that matches with the description. Descriptions a. Begins with net income and then lists adjustments to net income in order to arrive at operating cash flows. b. Item included in net income, but excluded from net operating cash flows. c. Net cash flows from operating activities divided by average total assets. d. Cash transactions involving lenders and investors. e. Cash transactions involving net income. f. Cash transactions for the purchase and sale of long-term assets. g. Purchase of long-term assets by issuing stock to seller. h. Shows the cash inflows and outflows from operations such as cash received from customers and cash paid for inventory, salaries, rent, interest, and taxes. Terms
Investors and creditors use the income statement to address what types of queries regarding future cash flows?
Classify following cash flows as operating, investing, or financing activities. Cash received from a bank loan
In the statement of cash flows, financing activities are those activities a. that include cash collections from customers and payments to suppliers. b. with owners or long-term creditors or that involve borrowing cash on a short-term basis. c. that involve the purchase and the sale of goods to customers including expenditures to operate the business d. that involve making and collecting loans or purchasing and selling plant assets.