WGU C214 Chapter 3 Question
and answers correctly solved
2025/2026
False.
True or False. Cash flow from
opera- tions cannot be CFO can be dramatically impacted by
managed. managerial discretion in the financial
reporting process.
False.
1. True or False. The Statement of
Cash Flows categorizes cash flow Cash flow from production is not a
into cash flow from operations, category. The three cash flow areas are
cash flow from production, and from operations, invest- ing, and
cash flow from financ- ing. financing.
2. (True/False) Unlike net income, CFO False
is not subject to managerial
discretion or manipulation. The answer is false. While gross cash flows
are dif- ficult to manage/manipulate, it is
relatively easy to shift cash flows between
the activity categories (e.g., shifting
between CFO and CFI). Hence, the analyst
must still be careful to understand the as-
sumptions/estimates/decisions made in
the re- ported data.
3. Operating Activities transactions that relate to the primary
operations of the company
4. Investing Activities Cash flow activities that include (a) cash
trans- actions that involve the purchase or
disposal of investments and property, plant,
and equipment using cash and (b) lending
money and collecting the loans.
,5. Financing Activities Cash flow activities that include (a)
obtain- ing cash from issuing debt and
repaying the
amounts borrowed and (b) obtaining cash
from
, WGU C214 Chapter 3
stockholders, repurchasing shares, and
paying dividends.
6. True of False. While gross cash True
flows are difficult to alter, it is
relatively easy to increase one
category by decreasing another
(CFO, CFI, or CFF)
Cash flows from operations (CFO),
cash flows from investing (CFI), and
cash flows from financing (CFF).
Net income doesn't account for the change in
7. Which of the following is not a
reason
for the difference between CFO and net cash
income?
Net income includes gains and
losses from the sale of assets
Net income doesn't account for
the change in cash
Revenue is not equal to cash
collected Net income includes
non-cash expens- es
(depreciation expense)
8. Suppose a firm shows an increase in ac- Correct Answer: The change will
decrease CFO by
counts receivable of $100 during a Statement of Cash Flows?
pe- riod. Considered in isolation,
which of the follow best describes The change will decrease CFO
the impact of this change on the by $100 The change will
, increase CFO by $100 $100
An increase in an asset account indicates an out-
flow of cash. Since A/R is an operating
account, the $100 increase will decrease
CFO by $100.
and answers correctly solved
2025/2026
False.
True or False. Cash flow from
opera- tions cannot be CFO can be dramatically impacted by
managed. managerial discretion in the financial
reporting process.
False.
1. True or False. The Statement of
Cash Flows categorizes cash flow Cash flow from production is not a
into cash flow from operations, category. The three cash flow areas are
cash flow from production, and from operations, invest- ing, and
cash flow from financ- ing. financing.
2. (True/False) Unlike net income, CFO False
is not subject to managerial
discretion or manipulation. The answer is false. While gross cash flows
are dif- ficult to manage/manipulate, it is
relatively easy to shift cash flows between
the activity categories (e.g., shifting
between CFO and CFI). Hence, the analyst
must still be careful to understand the as-
sumptions/estimates/decisions made in
the re- ported data.
3. Operating Activities transactions that relate to the primary
operations of the company
4. Investing Activities Cash flow activities that include (a) cash
trans- actions that involve the purchase or
disposal of investments and property, plant,
and equipment using cash and (b) lending
money and collecting the loans.
,5. Financing Activities Cash flow activities that include (a)
obtain- ing cash from issuing debt and
repaying the
amounts borrowed and (b) obtaining cash
from
, WGU C214 Chapter 3
stockholders, repurchasing shares, and
paying dividends.
6. True of False. While gross cash True
flows are difficult to alter, it is
relatively easy to increase one
category by decreasing another
(CFO, CFI, or CFF)
Cash flows from operations (CFO),
cash flows from investing (CFI), and
cash flows from financing (CFF).
Net income doesn't account for the change in
7. Which of the following is not a
reason
for the difference between CFO and net cash
income?
Net income includes gains and
losses from the sale of assets
Net income doesn't account for
the change in cash
Revenue is not equal to cash
collected Net income includes
non-cash expens- es
(depreciation expense)
8. Suppose a firm shows an increase in ac- Correct Answer: The change will
decrease CFO by
counts receivable of $100 during a Statement of Cash Flows?
pe- riod. Considered in isolation,
which of the follow best describes The change will decrease CFO
the impact of this change on the by $100 The change will
, increase CFO by $100 $100
An increase in an asset account indicates an out-
flow of cash. Since A/R is an operating
account, the $100 increase will decrease
CFO by $100.
