Which statement is not correct?
A) Information in the cash flow statement is useful in assessing the ability of an entity to pay its debts as they fall due.
B) A comparison of the cash flow statement and the income statement can indicate to what extent the profit is represented by cash inflows.
C) The cash flow statement classifies cash flows into operating investing and financing groupings.
D) Operating activities are concerned with activities involving the sales and purchases of fixed assets.

Question

Quizplus · Accepted Answer

Operating activities in the cash flow statement are concerned with the day-to-day business operations of the entity. They include cash inflows and outflows from the sales and purchases of goods/services, taxes paid, and interest received/paid. They do not involve the sales and purchases of fixed assets which fall under investing activities. Therefore, statement D is not correct.

Which Statement Is Not Correct