18 - 1. Accounting standard requires company to complete a...

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1. Accounting standard requires company to complete a statement of cash flows in a complete set of financial statement ->T 2. Primary purpose of statement of cash flows is to report all major cash receipt and cash payment during the period. -> T 3. Noncash financing activities are disclose in the note in the financing section of the statement of cash flows -> F ( Nowhere in the body of statement of cash flows) 4. Information to prepare the statement of cash flows usually comes from comparative balance sheet, current income statement, and additional information ->T 5. To be classified as a cash equivalent and investment must be within 6 months of maturity day. ->F (3 months) 6. Depreciation is often referred to as noncash expense. -> T 7. The FASB recommends that operating section of the statement cash flows be reported using direct method. -> T 8. Both the direct and indirect method yield identical net cash flows provided or used by operating activities. -> T 9. The indirect method reports individual operating cash outflows and cash inflows. -> F (indirect method starts with net income and adjust) 10. When preparing operating section using the indirect method, noncash expenses are added back to net income. -> T (depreciation, losses…) 11. Companies have an option of using either method. ->T 12. The direct method reports begins with net income and then adjust for items necessary to calculate cash provided or used by operating activities. -> F 13. Financing and investing activities would be identical under both methods. -> T 14. Cash Equivalents : 1) be readily convertible to a known amount of cash. 2) be
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18 - 1. Accounting standard requires company to complete a...

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