When Preparing a Statement of Cash Flows, Retained Earnings Adjustments

question 44

Multiple Choice

When preparing a statement of cash flows, retained earnings adjustments are required so thatwhich of the following are separated on the statement?

• A) depreciation and purchases
• B) net profits and dividends
• C) assets and liabilities
• D) revenue and cost

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Definitions:

Cash Inflows

The total amount of money being received by a company from its various business activities, such as sales revenue, investments, and loans.

Cash Outflows

Cash outflows represent money leaving a business, covering expenses like payroll, rent, materials, and other operational costs, crucial for cash flow management.

Present Value

The current value of a future amount of money or stream of cash flows, discounted back to the present using a specific discount rate.

Equal Annual Cash Flows

A series of identical cash amounts that occur at equal intervals over a period of time, commonly used in financial analysis.