Reference no: EM131715336

QUESTION 1

Which items below would result in net cash flow from operating activities being higher than net income?
Decrease in accounts payable and increase in prepaid expenses.
Increase in accrued liabilities and increase in inventory.
Increase in accounts payable and decrease in accounts receivable.
Decrease in accrued liabilities and increase in inventory.

QUESTION 2

Which items below would result in net cash flow from operating activities being lower than net income?
Increase in accounts payable and increase in income taxes payable.
Increase in inventory and increase in accounts receivable.
Increase in accounts payable and decrease in prepaid expenses.
Depreciation expense and decrease in accounts payable.

QUESTION 3

Why is the statement of cash flows an important analytical tool for creditors and investors?
It helps determine the firm's ability to generate profits.
It helps determine the firm's ability to grow sales.
It helps determine the firm's asset needs.
It helps determine the firm's capacity to meet obligations for cash.