BUS 251 - Accounting - SFU – TEST
QUESTIONS AND ANSWERS.
what does the use of accrual accounting mean for revenues and expenses on the statement of
income vs. the statement of cash flows? - Answer that the revs and expenses do not match on
the statement of income and the statement of cash flows
what is the cash flow statement utilized for? - Answer it provides perspective on an
organization's performance by summarizing its cash outflows and inflows and highlights
activities that resulted in the change of net cash.
the statement of cash flow is important to which user? - Answer important for financial
statement users
what are the three business activities? - Answer financing, investing, operating
what is included in the operating activity? - Answer inflows and outflows relating to the sale of
goods and services
what is included in the financing activity? - Answer repaying or borrowing money (debt),
selling/purchasing shares (equity) and dividends payments
what is included in the investing activity? - Answer the purchase or sale of long-lived assets
what is the main difference between a statement of income vs statement of cash flows? -
Answer statement of income uses accrual basis of accounting and statement of cash flows
uses cash basis and cash flows focus on more than just operating activites
what is the indirect method of cash flows statement? - Answer A method of presenting the
cash flow from operations in which the amount of net income is adjusted for all the non-cash
revenues or expenses, to convert net income from an accrual-basis amount to its cash-basis
equivalent
what is the direct method of cash flows statement? - Answer A method of presenting the cash
flow from operations that shows the direct gross amounts of cash receipts from revenues and
QUESTIONS AND ANSWERS.
what does the use of accrual accounting mean for revenues and expenses on the statement of
income vs. the statement of cash flows? - Answer that the revs and expenses do not match on
the statement of income and the statement of cash flows
what is the cash flow statement utilized for? - Answer it provides perspective on an
organization's performance by summarizing its cash outflows and inflows and highlights
activities that resulted in the change of net cash.
the statement of cash flow is important to which user? - Answer important for financial
statement users
what are the three business activities? - Answer financing, investing, operating
what is included in the operating activity? - Answer inflows and outflows relating to the sale of
goods and services
what is included in the financing activity? - Answer repaying or borrowing money (debt),
selling/purchasing shares (equity) and dividends payments
what is included in the investing activity? - Answer the purchase or sale of long-lived assets
what is the main difference between a statement of income vs statement of cash flows? -
Answer statement of income uses accrual basis of accounting and statement of cash flows
uses cash basis and cash flows focus on more than just operating activites
what is the indirect method of cash flows statement? - Answer A method of presenting the
cash flow from operations in which the amount of net income is adjusted for all the non-cash
revenues or expenses, to convert net income from an accrual-basis amount to its cash-basis
equivalent
what is the direct method of cash flows statement? - Answer A method of presenting the cash
flow from operations that shows the direct gross amounts of cash receipts from revenues and
