Which of the following statements is true? Users want to assess if:
A)cash from financing activities is sufficient to cover investing activities in the long run.
B)cash from continuing operations is sufficient to cover investing and financing activities in the long run.
C)cash from continuing operations is sufficient to cover investing activities in the long run.
D)cash from investing activities is sufficient to cover financing activities in the long run.

Question

Quizplus · Accepted Answer

Cash from continuing operations is the cash generated by a company's normal business operations and is considered to be a more reliable indicator of a company's ability to generate cash in the long run. It shows whether the company is able to generate cash that is sufficient to cover both its investing and financing activities. Choice A is incorrect as cash from financing activities is concerned with obtaining cash, not generating it. Choice C is incorrect as it only covers investing activities and not financing activities. Choice D is incorrect as cash from investing activities is concerned with the acquisition and disposal of long-term assets, not financing activities.

Which of the Following Statements Is True? Users Want to Assess