Which of the Following Is True of Projecting Future Cash

question 27

Multiple Choice

Which of the following is true of projecting future cash flows of an investment?

• A)Information on cash flow will also include non-cash transactions like depreciation.
• B)Cash inflows and cash outflows are treated separately, rather than being netted together.
• C)Cash flows are projected by accounting personnel without considering input from other business functions.
• D)The initial investment is always treated separately from all other cash flows.

---

Definitions:

Operating Activities

Transactions and events that are directly related to the primary operations of the company, such as sales and service delivery.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Gain on Sale

The profit earned from the sale of an asset or investment, calculated as the difference between the sale price and the original purchase price.

Operating Activities

The day-to-day actions that are involved in running a business and generating revenue, such as production, sales, and delivery of the company’s product and services.