Multiple Choice
Which of the following is an objective 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 would NOT be reported on the statement of cash flows?
A
Depreciation expense
B
Cash dividends paid
C
Cash paid to suppliers
D
Cash received from customers
Verified step by step guidance1
Understand the purpose of the statement of cash flows: It reports cash inflows and outflows categorized into operating, investing, and financing activities. The goal is to show how cash is generated and used during a specific period.
Review the items listed in the problem: Depreciation expense, cash dividends paid, cash paid to suppliers, and cash received from customers. Determine whether each item involves actual cash movement.
Analyze 'Depreciation expense': Depreciation is a non-cash expense that allocates the cost of a tangible asset over its useful life. Since it does not involve cash movement, it is not reported on the statement of cash flows.
Examine 'Cash dividends paid': Dividends paid involve cash outflows and are reported under financing activities on the statement of cash flows.
Evaluate 'Cash paid to suppliers' and 'Cash received from customers': Both involve cash movement and are reported under operating activities on the statement of cash flows.
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