Chapter 18- CFS

Question 0

What are the three classifications of cash flows?

Answer 0

1. Operating activities (affect net income)
2. Investing activities (affect investments and fixed assets)
3. Financing activities (affect long term liabilities and equity)

Question 1

What is the purpose of the cash flow statement?

Answer 1

Provide information about an entitys cash receipts and cash payments during a period

Question 2

What two factors does a CFS help to predict?

Answer 2

1. The companys ability to generate future cash flows

2. The companys ability to pay dividends and meet obligations

Question 3

What are the three steps when preparing a CFS?

Answer 3

1. Determine the net increase in cash
2. Determine the net cash provided by operating activities
3. Determine the net cash provided by investing/financial activities