Which Statement Is Not Correct

question 12

Multiple Choice

Which statement is not correct?

• A) Information in the cash flow statement is useful in assessing the ability of an entity to pay its debts as they fall due.
• B) A comparison of the cash flow statement and the income statement can indicate to what extent the profit is represented by cash inflows.
• C) The cash flow statement classifies cash flows into operating investing and financing groupings.
• D) Operating activities are concerned with activities involving the sales and purchases of fixed assets.

---

Definitions:

CVP Analysis

A management accounting technique used to determine the effect of varying levels of cost and volume on operational profit.

Management Function

The process of planning, organizing, leading, and controlling resources to achieve organizational goals.

CVP Analysis

Cost-Volume-Profit Analysis is a method for assessing how fluctuations in costs and sales volumes impact the operating and net income of a business.

Depreciation Expense

The allocated amount of the cost of a tangible fixed asset written off as an expense in the company's accounts over its useful life, reflecting the asset's consumption or loss of value.