Ch17 TorF

Created by kgoldner 

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20 terms

True

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement

False

For external reporting a company must prepare either an income statement or a statement of cash flows, but not both

False

A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions

True

A statement of cash flows indicates the sources and uses of cash during a period

False

In preparing a statement of cash flows, cash equivalents are subtracted from cash in order to compute the net change in cash during a period

True

Cash equivalents are highly liquid investments that have maturities of less than three months

False

The use of cash to purchase highly liquid short term investments (cash equivalents) would be reported on the statement of cash flows as an investing activity

True

In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt

False

Non cash investing and financing activities must be reported in the body of a statement of cash flows

False

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities

True

The sale of land for cash would be classified as a cash inflow from an investing activity

False

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income

False

The receipt of dividends from long term investments in stock is classified as a cash inflow from investing activities

True

The payment of interest on bonds payable is classified as a cash outflow from operating activities

False

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities

True

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash

False

All major financing and investing activities affect cash

False

Cash provided by operations is generally equal to operating income

True

Using the indirect method an increase in accounts receivable during a period is deducted from net income in calculating cash provided by operations

False

Using the indirect method an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations

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