When Analyzing the Statement of Cash Flows, Which of the Following

question 78

Multiple Choice

When analyzing the statement of cash flows, which of the following statements is TRUE?

• A)A company with a large cash balance is ensured success.
• B)A shortage of cash can lead a company to bankruptcy.
• C)Cash has no affect on the success of the company.
• D)Cash is ignored when analyzing a company.

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Definitions:

Account Category

A way to organize various types of accounts in accounting, such as assets, liabilities, equity, revenue, and expenses, based on their nature.

Subsidiary Ledger

A detailed ledger that contains all the transactions of a particular account, which then summarizes into a single general ledger account.

Accounts Receivable

Represents money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Financial Statement

A documented summary of financial transactions and standing for a company, person, or alternative entity.