The Statement of Cash Flows Is Not Useful for

question 147

Multiple Choice

The statement of cash flows is not useful for

• A) planning future investing and financing activities
• B) determining a company's ability to pay its debts
• C) determining a company's ability to pay dividends
• D) calculating the net worth of a company

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Definitions:

Bad Debt Expense

An expense recognized when a company determines that a customer's debt is no longer collectible.

Cash Realizable Value

The amount of money that could be realized from assets if they were sold, after settling any associated costs.

Allowance Method

The allowance method is an accounting technique that enables companies to anticipate and adjust for expected bad debts or credit losses in their financial statements.

Direct Write-off Method

Accounting practice where uncollected receivables are directly written off against income when deemed uncollectible, without using an allowance account.