When Evaluating the Statement of Cash Flows, Which of the Following

question 97

Multiple Choice

When evaluating the statement of cash flows, which of the following statement(s) is/are true?

• A) Negative cash flow could be a result of investments in new fixed assets or inventory.
• B) Cash expenditures used to expand the firm could drain cash during expansion periods.
• C) Can assist financial professionals in identifying where cash is generated and dispersed.
• D) All of the above.

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Definitions:

Repayment of Loan

The process of paying back borrowed money to the lender, typically involving periodic payments of principal and interest over a set term.

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Accounts Payable

Liabilities of a business that are due to creditors within a short period of time, usually for the purchase of goods and services.

Expenses

The cost of assets consumed or services used in the process of generating revenues.