Where is the overall change in cash shown in the statement of cash flows? O In t

Question

Where is the overall change in cash shown in the statement of cash flows? O In the top part, before the operating activities section. 0 In the bottom part, following the financing activities section. O Change in cash does not appear on the statement of cash flows 0 In one of the operating, investing, or financing activities section. Question 2 1 pts In what order do the three sections of the statement of cash flows appear when reading from top to bottom? investing, operating, financing O operating, investing, and financing financing, investing, operating O operating, financing, investing Question 3 1 pts Total cash inflow in the operating section of the statement of cash flows should include which of the following O Cash received in advance of revenue recognition (unearned revenues) O Cash received from customers at the point of sale All of the options are included. Cash collections from customer accounts receivable

Explanation / Answer

1) The overall change in cash shown in statement of cash flows as net increase or decrease in cash. It is shown in the bottom part of the statement of cash flows, following the financing activities section. Therefore the correct option is B) In the bottom part, following the financing activities section.

2) In the top section of statement of cash flows, operating activities are shown, then in the middle investing activities are shown and in the bottom part financing activities are shown. Therefore the order is Operating, Investing and Financing. Hence the correct Option is B) Operating, Investing and Financing.

3) Total cash inflows in the operating section of the statement of cash flows will include all the options given (i.e. cash received in advance of revenue recognition, cash received from customers at the point of sale or cash sales and Cash collections from customer accounts receivable.) Therefore, the correct answer is C) All of the Options are included.

4) The increase in prepaid expenses balance should be subtracted from net income because the net increase in prepaid expenses implies that cash is reduced by payment of prepaid expenses. Therefore the correct option is A) The change in account balance should be subtracted from net income because the net increase in prepaid expenses did not impact income but did reduce the cash balance.

5) All of the given options should be added when computing the cash flows from operations using the indirect method because increase in current liabilities and decrease in current assets is added to net income to compute cash from operations. Therefore the correct option is B) All of the options should be added.

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