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A. A statement of cash flows measures the profitability of

Question : A. A statement of cash flows measures the profitability of : 2267

A. A statement of cash flows measures the profitability of a company using the cash basis of accounting.

B. Two different methods may be used to compute the net cash flows from operating, investing, and financing activities.

C. Noncash investing and financing activities need to be disclosed under “other activities.”

D. The statement of cash flows reports the changes in cash and cash equivalents.

2. Which of the following is a cash equivalent?

A. Accounts receivable

B. Certificates of deposit that mature in less than three months

C. Certificates of deposit that mature in one year or less

D. Prepaid expenses

3. Which of the following activities is an operating activity?

A. Payment on the principal portion of a bank loan

B. Collection of cash from issuing stock

C.Payment of interest on a bank loan

D. Payment of cash dividends

4. Which of the following activities would NOT be considered an investing activity?

A. Issuance of common stock

B. Purchase of used equipment

C. Sale of land

D. Sale of a long-term investment

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