Practice: Statement of Cash Flows Quiz Quiz | Financial Accounting & Reporting (FAR)

Question 1

What is the primary purpose of the Statement of Cash Flows?

Answer

To report changes in shareholders' equity

Answer

To explain cash inflows and outflows during a reporting period

Answer

To calculate taxable income

Answer

To measure inventory turnover

Question 2

Which financial statement is prepared using actual cash flows rather than accrual accounting?

Answer

Income Statement

Answer

Statement of Changes in Equity

Answer

Statement of Cash Flows

Answer

Balance Sheet

Question 3

Which investment qualifies as a cash equivalent?

Answer

A Treasury bill with an original maturity of two months

Answer

A five-year corporate bond

Answer

Common stock held for investment

Answer

Land purchased for future expansion

Practice Quiz