Which of the Following Statements About the Statement of Cash

question 117

Multiple Choice

Which of the following statements about the statement of cash flows is correct?

• A)A company with a net loss on the income statement will always have a net cash outflow from operating activities.
• B)A purchase of equipment is classified as a cash inflow from investing activities.
• C)Cash dividends received on stock investments are classified as cash flows from operating activities.
• D)Cash dividends paid are classified as cash flows from operating activities.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables amount to reflect what is expected to be collectible.

Bad Debts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Uncollectible Accounts

Refers to receivables that are deemed unlikely to be collected, indicating potential losses for a company.

Allowance for Doubtful Accounts

An accounting provision made by a company to account for accounts receivable that might not be collected.