Which of the following statements is CORRECT? a. The statement of cash flows ref

Question

Which of the following statements is CORRECT?

a. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital. b. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock. c. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets. d. The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit. {C} e. The statement of cash flows shows how much the firm's cash, the total of currency, bank deposits, and short-term liquid securities (or cash equivalents), increased or decreased during a given year.

Explanation / Answer

Answer

e. The statement of cash flows shows how much the firm's cash, the total of currency, bank deposits, and short-term liquid securities (or cash equivalents), increased or decreased during a given year.

Note :

1) The statement of cash flows reflects cash flows from continuing operations as well as  reflect the effects of changes in working capital. in Cash Flow from Operating Activity

2)  The statement of cash flows reflects cash flows from operations and from borrowings, it also reflect cash obtained by selling new common stock in Cash Flow from Financing Activity

3) The statement of cash flows reflects cash flows from operations,it also reflect the effects of buying or selling fixed assets in  Cash Flow from Investing Activity

4) The statement of cash flows shows where the firm's cash is genereted or used during the year

5) The statement of cash flows shows the changes in Cash & cash Equivalent during the year

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