Which of the Following Statements Is False

question 9

Multiple Choice

Which of the following statements is false?

• A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows.
• B) Investments in cash equivalents and investments in stock have the same economic effect--assets increase and decrease by the same amount.
• C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of 3 months or less when purchased.
• D) Investments in stock are reported as a financing activity on the statement of cash flows.

---

Definitions:

EOQ

Economic Order Quantity, a formula that determines the ideal order quantity that minimizes total inventory holding costs and ordering costs.

Fixed Ordering Costs

Fixed ordering costs are the expenses that do not change with the quantity of order and typically include things like delivery charges and order processing fees.

Inventory Value

The total cost or market value of all the goods and materials held by a company.

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services provided on credit.