1. As discussed in class, which section of the statement of cash flows deals wit
ID: 2422659 • Letter: 1
Question
1. As discussed in class, which section of the statement of cash flows deals with the most important source of cash for a business?
A. Financing activity on a statement of cash flows
B. Operating activity on a statement of cash flows
C. Repayment activity on a statement of cash flows
D. Investing activity on a statement of cash flows
2. The balance sheet tracks all of the following except :
A. the amount of untis of product the business produced during a period
B. the amounts of the business owes to other people
C. all the assets the business owns
D. the equity the owners have in the business
Explanation / Answer
1. As discussed in class, which section of the statement of cash flows deals with the most important source of cash for a business?
Answer
B. Operating activity on a statement of cash flows
Reason
A cash flow statement is a financial report that describes the sources of a company's cash and how that cash was spent over a specified time period. It does not include non-cash items such as depreciation. This makes it useful for determining the short-term viability of a company, particularly its ability to pay bills. Because the management of cash flow is so crucial for businesses and small businesses in particular, most analysts recommend that an entrepreneur study a cash flow statement at least every quarter.
Cash flow statement prepared in two methods , Regardless of whether the direct or the indirect method is used, the operating section of the cash flow statement ends with net cash provided (used) by operating activities. This is the most important line item on the cash flow statement. A company has to generate enough cash from operations to sustain its business activity. If a company continually needs to borrow or obtain additional investor capitalization to survive, the company's long-term existence is in jeopardy.
2. The balance sheet tracks all of the following except :
Answer
A. the amount of untis of product the business produced during a period
Reason
The above statement tracking by Profit and loss account.
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