The Primary Purpose of a Statement of Cash Flows Is

question 3

Multiple Choice

The primary purpose of a statement of cash flows is to provide information about an entity's:

• A) gross profit.
• B) operating activities.
• C) long-term financial position.
• D) cash inflows and cash outflows.

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Definitions:

Projected ROEs

Estimated returns on equity, predicting future profitability based on company's equity investments.

Restricted Policy

A restricted policy typically involves limitations or controls set on certain actions or decisions within an organization, aiming to comply with regulations, reduce risk, or achieve specific goals.

Relaxed Policy

A financial strategy or policy that is less strict or rigid, often implying a more liberal approach to lending, investing, or managing assets.

Trade Credit

The arrangement between businesses to buy goods or services on account, paying the supplier at a later date.