Which of the Following Statements Regarding Cash Flows Is Not

question 25

Multiple Choice

Which of the following statements regarding cash flows is not accurate?

• A) Before the present cash flow statement standard became effective, companies had a choice of whether to report cash flow from operating activities or working capital from operating activities.
• B) Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report.
• C) The reported cash flow from operating activities has been found useful in evaluating a firm's ability to make interest payments and repay debt.
• D) Information about past cash flows is useful in predicting an entity's future cash flows.
• E) Information about the balances of current liabilities, long-term debt and stockholders' equity can be found in the statement of cash flows.

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Definitions:

Reduce Uncertainty

The action or practice of making a situation or outcome more predictable or less ambiguous.

Leasing

A contractual agreement where one party, the lessor, allows another party, the lessee, to use an asset for a specified period in exchange for periodic payments.

Temporary Basis

A condition or status applied for a limited time period, often used in finance to describe temporary adjustments or measures.

Assets

Resources owned or controlled by a business or an individual that are expected to produce economic value or benefit in the future.