Which of the following items about the statement of cash flows is correct?
A)Noncash expenses such as depreciation are subtracted from net income when using the indirect method for computing cash flows from operating activities.
B)Cash equivalents are highly liquid investments with original maturities of less than three months.
C)Repurchasing stock from owners would be classified as an investing cash outflow.
D)Cash paid for interest would be classified as a financing cash outflow.

Question

Quizplus · Accepted Answer

Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less, making option B correct.

Which of the Following Items About the Statement of Cash