Explain the value of separating cash flows into operating activities, investing activities, and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.
What will be an ideal response?
By separating cash flows into three categories, the statement of cash flows allows users
to focus their analysis on specific areas of importance. The operating section of the statement reveals the net effect of cash inflows and cash outflows from the core activities of a business which directly affect its operating income. Operating cash flows indicate the health of a business. A business with a declining or negative amount of cash from operating activities may be in financial difficulty. Analysis of the financing section reveals to financial statement users how a business raises funds from the outside. Analysis of the investing activity section reveals whether or not a firm is acquiring new assets and disposing of existing assets and thus investing in the
future of the company.
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Which of the following statements regarding Check 21 is false?
a. It allows banks to exchange checks electronically. b. Before this system, paper checks were flown around the country from bank-to-bank to complete the check-clearing process. c. It requires that banks exchange check images. d. It significantly reduced float.
In preparing a work sheet, the amounts for the Trial Balance columns are copied from the
a. general journal; b. sales and purchases journals; c. general ledger; d. latest income statement and balance sheet; e. current chart of accounts
Julie must decide if she should allow one of her employees to violate company policy to go on vacation. She is faced with which type of ethical leadership challenge?
A. challenge of deceit B. challenge of consistency C. challenge of responsibility D. challenge of loyalty
A real-time practice drill for a crisis communications plan involves having those involved in the plan run through their reactions to a scenario in a conference room setting
Indicate whether the statement is true or false