ACC 305 WEEK 9 QUIZ 6
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ACC 305 Week 9 Quiz 6 – STR NEW
ACC 305 Week 9 Quiz 6
TRUE FALSE—Conceptual 1. The primary purpose of the statement of cash flows is to provide cash-basis information about the company’s operating, investing, and financing activities. 2. The statement of cash flows provides information to help investors and creditors assess the cash and noncash investing and financing transactions during the period. 3. Companies classify some cash flows relating to investing or financing activities as operating activities. 4. The first step in the preparation of the statement of cash flows is to determine the net cash flow from operating activities. 5. The net increase (decrease) in cash reported on the statement of cash flows should reconcile the beginning and ending cash balances reported in the comparative balance sheets. 6. Under the accrual basis of accounting, net income is usually the same as net cash flow from operating activities. 7. A company can convert net income to net cash flow from operating activities through either the direct method or the indirect method. 8. The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities. 9. The indirect method adjusts net income for items that affected reported net income but did not affect cash. 10. The FASB encourages the use of the indirect method over the direct method. 11. When accounts receivable decrease during a period, cash-basis revenues are higher than revenues reported on an accrual basis. 12. When prepaid expenses decrease during a period, expenses on the accrual-basis are lower than