Answer the following questions for the directors: True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance? True or false, investors and management use the statement of cash flows to evaluate a firm's profitability? True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans? True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? True or false, buying property, plant and equipment would be considered a cash outflow from financing? True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows?

Statement of Cash Flows is a Financial Statement which provides data about the movement of cash of a…

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter1: Accounting And The Financial Statements

Section: Chapter Questions

Problem 12MCQ: Which of the following sentences regarding the statement of cash flows is false? The statement of...

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Answer the following questions for the directors:

True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance?
True or false, investors and management use the statement of cash flows to evaluate a firm's profitability?
True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans?
True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities?
True or false, buying property, plant and equipment would be considered a cash outflow from financing?
True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?
True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows?

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