The Information in a Statement of Cash Flows Enables Stakeholders

question 36

Multiple Choice

The information in a statement of cash flows enables stakeholders to assess the

• A) amounts, timing and certainty of future cash flows.
• B) liquidity and solvency of an entity.
• C) change in working capital during the period.
• D) reason(s) for the difference between net income and cash flows from financing activities.

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Definitions:

Supplying Division

The department or unit within a company that is responsible for providing the materials, products, or services to other divisions or departments within the same company.

Transfer Price Approach

A method used for pricing transactions between affiliated companies or divisions within the same larger corporate entity.

Standard Cost Approach

A costing method that assigns a fixed cost to inventory and cost of goods sold, based on standard estimates of input costs.

Market Price Approach

An approach to transfer pricing that uses the price at which the product or service transferred could be sold to outside buyers as the transfer price.