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Chapter 12 Quiz
Question 1
The statement of cash flows is a required statement that must be
prepared along with an income statement, balance sheet, and retained
earnings statement.
Question 2
The activity from the balance sheet to be presented in the financing
activities section of the statement of cash flows is based on an analysis
of stockholders’ equity only.
Question 3
The acquisition of a building by issuing bonds would be considered an
investing and financing activity that did not affect cash.
Question 4
The cash debt coverage ratio indicates a company’s ability to repay its
liabilities from cash generated from operations.
Question 5
The current cash debt coverage ratio is considered a better representative
of liquidity than the current ratio because it involves the entire year
rather than a balance at one point in time.
Question 6
The statement of cash flows