Concept explainers
Quick Check
(Answers are given here)
The statement of cash flows is designed for all of the following purposes except
- a. to list all revenues and expenses.
- b. to determine a company’s ability to pay dividends and interest.
- c. to predict future cash flows.
- d. to provide information about cash receipts and cash payments during a period.
To identify: The purpose for which the statement of cash flows is not designed.
Answer to Problem 1QC
a. To list all revenues and expenses.
Explanation of Solution
Statement of cash flows:
This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. The statement of cash flow also determines the company’s ability to pay dividends and interest.
Thus option b, c, and d, are not correct answer as per the above explanation, only option a is correct answer as per above explanation.
Hence, the correct answer is option a.
Want to see more full solutions like this?
Chapter 11 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
- In a completed worksheet, a. the debit column contains the cash inflows. b. the debit column contains the cash outflows. c. the credit column contains the cash inflows. d. the credit column contains only operating cash flows. e. None of these.arrow_forwardUse the following cash transactions relating to Lucknow Company to determine the cash flows from operating, using the direct method.arrow_forwardList the three operating cash inflows that a company reports under the direct method.arrow_forward
- Match the following assertions with their associated description: (a) existence/occurrence, (b) completeness. (c) rights and obligations, (d) valuation or allocation, (e) presentation and disclosure. 1. Cash accounts arc properly classified on the balance sheet and disclosed in the notes to the financial statements. 2. Cash balances exist at the balance sheet date. 3. The recorded balances reflect the true underlying economic value of those assets. 4. The company has title to the cash accounts as of the balance sheet date. 5. Cash balances include all cash transactions that have taken place during the period.arrow_forwardAnalysis of Longmind Companys accounts revealed the following activity for Equipment, with descriptions added for clarity of analysis. How would these two transactions be reported for cash flow purposes? Note the section of the statement of cash flow, if applicable, and if the transaction represents a cash source, cash use, or noncash transaction.arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub