Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

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

The statement of cash flows does not include information about cash received from issuing shares.

The statement of cash flows reports a company's cash inflows and outflows classified into operating, investing, and financing activities.

The statement of cash flows only reports cash transactions related to operating activities.

The statement of cash flows is prepared using only the accrual basis of accounting.

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Verified step by step guidance

Step 1: Understand the purpose of the statement of cash flows. It is a financial statement that provides information about a company's cash inflows and outflows during a specific period, classified into three main activities: operating, investing, and financing.

Step 2: Analyze the first option: 'The statement of cash flows does not include information about cash received from issuing shares.' This is incorrect because cash received from issuing shares is classified under financing activities in the statement of cash flows.

Step 3: Analyze the second option: 'The statement of cash flows reports a company's cash inflows and outflows classified into operating, investing, and financing activities.' This is correct because the statement of cash flows is designed to categorize cash transactions into these three activities.

Step 4: Analyze the third option: 'The statement of cash flows only reports cash transactions related to operating activities.' This is incorrect because the statement of cash flows includes cash transactions related to operating, investing, and financing activities, not just operating activities.

Step 5: Analyze the fourth option: 'The statement of cash flows is prepared using only the accrual basis of accounting.' This is incorrect because the statement of cash flows is prepared using the cash basis of accounting, focusing on actual cash inflows and outflows rather than accruals.