Which of the Following Is False Concerning the Statement of Cash

question 11

Multiple Choice

Which of the following is false concerning the statement of cash flows?

• A) When pension expense exceeds cash funding, the difference is deducted from investing activities on the statement of cash flows.
• B) The FASB requires companies to classify all income taxes paid as operating cash outflows.
• C) Under U.S. GAAP, the purchase of land by issuing stock will be shown as a cash outflow under investing activities and a cash inflow under financing activities.
• D) All of the above are true concerning the statement of cash flows.

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Definitions:

Creditors

People or organizations that provide loans or credit to others with the anticipation of receiving payment back later on.

NPVGO

Net Present Value of Growth Opportunities; a valuation method that calculates the present value of investment opportunities a company is expected to undertake in the future.

Above Average P/E Multiple

A valuation metric indicating that a company's current share price is higher relative to its per-share earnings than the industry or overall market average.

Risk-adjusted Equity Cost

A method of determining the cost of equity capital that incorporates the risk associated with the equity investment.