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

4. What is one reason why a company should prepare an operating budget?

To estimate future cash inflows and outflows from day-to-day business activities

To record historical cash transactions for external reporting

To calculate the company's income tax liability

To determine the fair value of company assets

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Verified step by step guidance

Understand the purpose of an operating budget: An operating budget is a financial plan that estimates the revenues and expenses for a specific period, typically a fiscal year. It focuses on day-to-day business activities and helps in planning and decision-making.

Analyze the options provided in the question: Each option represents a potential reason for preparing an operating budget. Evaluate whether each option aligns with the primary purpose of an operating budget.

Option 1: 'To estimate future cash inflows and outflows from day-to-day business activities' - This aligns with the purpose of an operating budget, as it helps businesses forecast their financial performance and manage resources effectively.

Option 2: 'To record historical cash transactions for external reporting' - This is not the purpose of an operating budget. Historical cash transactions are typically recorded in financial statements, not in budgets.

Option 3: 'To calculate the company's income tax liability' and Option 4: 'To determine the fair value of company assets' - These are unrelated to the purpose of an operating budget. Tax liability is calculated based on taxable income, and asset valuation is part of financial reporting or appraisal processes.