Cash Flows Are Grouped in the Statement of Cash Flows

question 66

Multiple Choice

Cash flows are grouped in the statement of cash flows into the following major categories:

• A) Operating activities, investing activities, and financing activities.
• B) Cash receipts, cash disbursements, and noncash activities.
• C) Direct cash flows and indirect cash flows.
• D) Operating activities, investing activities, and collecting activities.

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Definitions:

Restricted Fund Method

An accounting practice for nonprofit organizations, segregating funds according to restrictions imposed by donors.

Deferral Method

A method of accounting that allows for income or expenses to be recognized at a later date rather than when they are initially incurred.

Donated Land

This informs the recording of land gifted to an entity, valued at its fair market value at the time of donation as an asset on the balance sheet.

Donated Machinery

Assets received for free by an entity, where the fair market value of the machinery is recorded as both income and an asset on the balance sheet.