Which Statement Regarding the Statement of Cash Flows Is True

question 87

Multiple Choice

Which statement regarding the statement of cash flows is true?

• A)In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.
• B)In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.
• C)In the statement of cash flows, depreciation charges are reported as a use of cash.
• D)In the statement of cash flows, a decrease in inventories is reported as a use of cash.

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Definitions:

Dividends Payable

A liability on a company's balance sheet that indicates the amount of dividends it owes to shareholders, to be paid out in the future.

Cash Flow Statement

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Operating Activities

Generally speaking, activities that affect current assets, current liabilities, or net income.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.