D105 UNIT 8- STATEMENT OF CASH
FLOWS EXAM QUESTIONS &
VERIFIED COMPLETE SOLUTIONS
Statement of Cash Flows - Correct Answer ✔✔ A financial statement that reflects an
entity's cash receipts classified by major sources and its cash payments classified by
major uses.
Operating Activities - Correct Answer ✔✔ Cash flow activities that involve the cash
effects of transactions that enter into the determination of net income, such as cash
receipts from sales of goods and services, and cash payments to suppliers and
employees for acquisitions of inventory and expenses. (i.e., Income Statement items)
Investing Activities - Correct Answer ✔✔ Cash flow activities that a. involve long-term
assets and include (a) making and collecting loans and (b) acquiring and disposing of
investments and productive long-lived assets. (i.e., generally, Long-Term Asset Items)
Financing Activities - Correct Answer ✔✔ Cash flow activities that involve liability and
stockholders' equity and include (a) obtaining cash from creditors and repaying amounts
borrowed and (b) obtaining capital from owners and providing them with a return on,
and a return of, their investment. (i.e., generally, Long-Term Liability and Equity Items)
Which classification of activities involves the cash effects of transactions that enter into
the determination of net income?
(a) Financing activities
(b) Operating activities
(c) Noncash investing and financing activities
(d) Investing activities - Correct Answer ✔✔ (b) Operating activities
What best describes the primary purpose of the information provided by the statement
of cash flows?
(a) To provide information about the entity's ability to meet its obligations, its ability to
pay dividends, and its need for external financing
(b) To provide information about cash receipts and cash payments of an entity during a
period
(c) To provide information about the operating, investing, and financing activities of an
entity during a period
(d) To provide information that is useful in assessing cash flow prospects - Correct
Answer ✔✔ (b) To provide information about cash receipts and cash payments of an
entity during a period
FLOWS EXAM QUESTIONS &
VERIFIED COMPLETE SOLUTIONS
Statement of Cash Flows - Correct Answer ✔✔ A financial statement that reflects an
entity's cash receipts classified by major sources and its cash payments classified by
major uses.
Operating Activities - Correct Answer ✔✔ Cash flow activities that involve the cash
effects of transactions that enter into the determination of net income, such as cash
receipts from sales of goods and services, and cash payments to suppliers and
employees for acquisitions of inventory and expenses. (i.e., Income Statement items)
Investing Activities - Correct Answer ✔✔ Cash flow activities that a. involve long-term
assets and include (a) making and collecting loans and (b) acquiring and disposing of
investments and productive long-lived assets. (i.e., generally, Long-Term Asset Items)
Financing Activities - Correct Answer ✔✔ Cash flow activities that involve liability and
stockholders' equity and include (a) obtaining cash from creditors and repaying amounts
borrowed and (b) obtaining capital from owners and providing them with a return on,
and a return of, their investment. (i.e., generally, Long-Term Liability and Equity Items)
Which classification of activities involves the cash effects of transactions that enter into
the determination of net income?
(a) Financing activities
(b) Operating activities
(c) Noncash investing and financing activities
(d) Investing activities - Correct Answer ✔✔ (b) Operating activities
What best describes the primary purpose of the information provided by the statement
of cash flows?
(a) To provide information about the entity's ability to meet its obligations, its ability to
pay dividends, and its need for external financing
(b) To provide information about cash receipts and cash payments of an entity during a
period
(c) To provide information about the operating, investing, and financing activities of an
entity during a period
(d) To provide information that is useful in assessing cash flow prospects - Correct
Answer ✔✔ (b) To provide information about cash receipts and cash payments of an
entity during a period
