1. The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period.%u2028True False

2. The statement of cash flows reports and proves the net change in cash for a reporting period.%u2028True False

3. To be classified as a cash equivalent, the only criterion an item must meet is that it must be readily convertible to a known amount of cash.%u2028True False

4. The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.%u2028True

5. Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions. True False

6. A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.%u2028True False

7. Business activities that generate or use cash are classified as operating, investing, or financing activities on the statement of cash flows.%u2028True False

8. Financing activities include (a) the purchase and sale of long-term assets, (b) the purchase and sale of short-term investments, and (c) lending and collecting on loans. True False

9. Cash paid for merchandise is an operating activity. True False

10. The purchase of stock in another company is classified as a financing activity. True False

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12. Intentionally Left Blank (ignore)

13. Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.%u2028True False

14. Financial statement analysis lessens the need for expert judgment. True False

15. Financial statement analysis may be used for personal investment decisions. True False

16. The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.%u2028True False

17. External users of accounting information make the strategic and operating decisions of a company.%u2028True False

18. One purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency and effectiveness in providing products and services.%u2028True False

19. Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.%u2028True False

20. A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.%u2028True False

21. Financial analysis only refers to the communication of relevant financial information to decision makers.%u2028True False

22. Profitability is the ability to generate future revenues and meet long-term obligations. True False

Image text transcribed for accessibility The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period.%u2028True False The statement of cash flows reports and proves the net change in cash for a reporting period.%u2028True False To be classified as a cash equivalent, the only criterion an item must meet is that it must be readily convertible to a known amount of cash.%u2028True False The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.%u2028True False Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions. True False A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.%u2028True False Business activities that generate or use cash are classified as operating, investing, or financing activities on the statement of cash flows.%u2028True False Financing activities include (a) the purchase and sale of long-term assets, (b) the purchase and sale of short-term investments, and (c) lending and collecting on loans. True False Cash paid for merchandise is an operating activity. True False The purchase of stock in another company is classified as a financing activity. True False Intentionally Left Blank (ignore) Intentionally Left Blank (ignore) Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.%u2028True False Financial statement analysis lessens the need for expert judgment. True False Financial statement analysis may be used for personal investment decisions. True False The evaluation of company performance and financial condition includes evaluation of (1) past and current performance, (2) current financial position, and (3) future performance and risk.%u2028True False External users of accounting information make the strategic and operating decisions of a company.%u2028True False One purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency and effectiveness in providing products and services.%u2028True False Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk.%u2028True False A company's board of directors analyzes financial statements to assess future company prospects for making operating decisions.%u2028True False Financial analysis only refers to the communication of relevant financial information to decision makers.%u2028True False Profitability is the ability to generate future revenues and meet long-term obligations.