Which of the Following Statements Concerning the Statement of Cash

question 209

Multiple Choice

Which of the following statements concerning the statement of cash flows is true?

• A) The statement of cash flows is usually more accurate when using the indirect method.
• B) If the direct method is used a supplementary schedule reconciling the net income to net cash from operating activities must still be provided.
• C) The statement of cash flows reflects both earnings per share and cash per share.
• D) The statement of cash flows is an optional financial statement for external reporting purposes.

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Definitions:

Assets

Items of value owned by a person or company, including physical property, financial holdings, and intangible items that can be converted into cash.

Cash Budgets

Financial plans that forecast a company's cash inflows, outflows, and net cash balance for a specific period.

Acid-Test Ratio

A financial metric that evaluates a company's ability to pay off its current liabilities with its easily liquidated assets, also known as the quick ratio.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.