People also ask


  • Which statement is more consistent with the primary purpose of cash flows?

  • The direct method is more consistent with the primary purpose of the statement of cash flows. b. The direct method is known as the reconciliation method. c. All of these statements are true. d. The indirect method starts with income before income tax.

  • What determines the maturity of a security for cash equivalent classification purposes?

  • a. The date a security is purchased determines its original maturity for cash equivalent classification purposes. b. All short-term investments must be reported as cash equivalents. c. A one-year Treasury note could not qualify as a cash equivalent.

  • What determines the classification of short-term investments as cash equivalents?

  • The date a security is purchased determines its original maturity for cash equivalent classification purposes. b. All short-term investments must be reported as cash equivalents. c. A one-year Treasury note could not qualify as a cash equivalent. d. Once established, management’s policy for classifying items as cash equivalents cannot be changed.