Multiple Choice
Which of the following best describes the financing activities section of the statement of cash flows?
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13. Statement of Cash Flows
Introduction to the Statement of Cash Flows
Multiple Choice
Which of the following is a formal statement of a company's plans expressed in dollar amounts?
A
Balance Sheet
B
Budget
C
Income Statement
D
Statement of Cash Flows
Verified step by step guidance1
Step 1: Understand the question by identifying the key terms. The question asks for a formal statement of a company's plans expressed in dollar amounts. This implies a forward-looking document that outlines financial goals or projections.
Step 2: Review the options provided: Balance Sheet, Budget, Income Statement, and Statement of Cash Flows. Each of these represents a financial document, but their purposes differ.
Step 3: Clarify the purpose of each option:
- Balance Sheet: A snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.
- Budget: A forward-looking document that outlines a company's financial plans, goals, and expected revenues and expenses in dollar amounts.
- Income Statement: A report showing a company's financial performance over a period, including revenues, expenses, and net income.
- Statement of Cash Flows: A report detailing cash inflows and outflows over a period, categorized into operating, investing, and financing activities.
Step 4: Match the description in the question to the correct option. The question specifies 'plans expressed in dollar amounts,' which aligns with the purpose of a Budget, as it is a formal statement of financial plans and projections.
Step 5: Conclude that the correct answer is 'Budget,' as it is the only option that represents a company's financial plans expressed in dollar amounts.
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