Cash Flow Statement Quiz

What are the reasons that cash flow is an essential part of financial analysis?

• Cash flow is crucial for assessing liquidity, operational efficiency, and financial health.
• Cash flow is only important for tax purposes.
• Cash flow has no impact on investment decisions.
• Cash flow is irrelevant to business growth.

What is the purpose of the Cash Flow Statement?

• To provide a detailed analysis of stock market performance.
• To provide insights into cash inflows and outflows, helping assess liquidity and financial stability.
• To outline the company's long-term investment strategy.
• To summarize the company's revenue and expenses for the year.

How does the cash flow statement work with the income statement and the balance sheet?

• The cash flow statement replaces the income statement and balance sheet in financial reporting.
• The cash flow statement is independent and does not relate to the income statement or balance sheet.
• The cash flow statement only summarizes cash transactions without linking to other statements.
• The cash flow statement works with the income statement and balance sheet by linking net income to cash movements and showing how these affect cash on the balance sheet.

Identify which of the following transactions fall under operating, investing, and financing activities: Cash paid to suppliers

• Operating

• Investing

• Financing

• Accounting

Identify which of the following transactions fall under operating, investing, and financing activities: Cash paid to employees

• Operating

• Investing

• Financing

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company is called a ______

• income statement

• cash flow statement

• balance sheet

• statement of changes of equity

A purchase or sale of an asset (i.e. equipment, building), loans made to vendors or received from customers (i.e. bonds), or any payments related to a merger or acquisition is an example of _______.

• Operating

• Financing

• Investing

• Cash Flow

Receipts from sales of goods and services, interest payments Income tax payments, payments made to suppliers, salary and wage payments to employees, or rent payments may be examples of _______

• Operating

• Financing

• Investing

• Cash Flow

How much cash is received from the investment of a business owner, cash received from a bank loan, and the cash paid for a bank loan.

• Operating

• Financing

• Investing

• Cash Flow

In the context of the Statement of Cash Flows, which of the following transactions would be classified as “Financing Activities”?

·  (1) Issuing new shares

·  (2) Buying back company stock

·  (3) Paying off a long-term loan

·  (4) Selling equipment

·  (5) Receiving cash from a bank loan

•                                              3,4

• 1, 3, 5

• 2,4,5

• 1,3,4