HBX Core Exam Financial Accounting
With 100% Correct And Verified Answers
3 types of financial statements - Correct Answer-balance
sheet, income statement, statement of cash flows
Statement of Cash Flows - Correct Answer-A financial
statement that provides a detailed financial picture about the
cash receipts and cash payments of a business for a specific
period of time. It also reconciled beginning and end
balances.
sections of statement of cash flows - Correct Answer-
operating activities, investing activities, financing activities
cash flows from operating activities - Correct Answer-cash
inflows and outflows directly related to earnings from
normal operations. Under US GAAP, interest paid is
included here. Result is net cash flow from operating
activities.
indirect method of preparing operating section of cash flow -
Correct Answer-Start with net income from income
statement. Make adjustments to undo impact of accruals
made during that period.
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, cash flows from investing activities - Correct Answer-cash
inflows and outflows related to the acquisition or sale of
productive facilities, investments in the securities of other
companies, and loans to 3rd parties
cash flows from financing activities - Correct Answer-cash
inflows and outflows related to external sources of financing
(owners/investors and creditors) for the enterprise. Under
GAAP, dividends paid is in this section. Under IFRS,
dividends paid may be in operating section an interest paid
my be here.
Start up cash flow - Correct Answer-Negative or low
operating activity, negative cash from investing, large
fluctuations in cash flow from financing
Profitable/ growing business cash flow - Correct Answer-
Positive cash from operating activity, negative cash from
investing, positive/negative/neutral cash flow from financing
Mature company cash flow - Correct Answer-Positive cash
from operating activity, slightly negative cash from
investing, negative cash flow from financing
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