Indicate whether each of the following statements is true or false.
a)________ It is possible for a growing business to have substantial earnings, but yet be short of cash.b)________ It is possible for a well-established business to report large operating losses, but have positive cash flow from operating activities.c)________ A merchandising firm adding new stores must report the additional inventory purchases as investing activities.d)________ When equipment is purchased to replace old equipment, the transaction is reported as an operating activity.e)________ FASB requires companies to disclose significant investing and financing activities even if these transactions do not affect cash.

Question

Quizplus · Accepted Answer

b)True c)False d)False e)T. Cash purchases of inventory are operating activities.d)This is false. Cash flows reported as investing activities include cash payments (outflows)from purchasing property, plant, equipment.e)This is true. Noncash investing and financing activities are disclosed in a schedule.

Indicate Whether Each of the Following Statements Is True or False