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Basic Question 1 of 8
Which of the following statement(s) is (are) true?
II. Cash payments to purchase inventory are classified as investing activities.
III. Regardless of whether the direct or indirect method is used, the statement of cash flows will report the same dollar amount of net cash flow from operating activities.
I. Payments of dividends are classified as financing activities (under GAAP).
II. Cash payments to purchase inventory are classified as investing activities.
III. Regardless of whether the direct or indirect method is used, the statement of cash flows will report the same dollar amount of net cash flow from operating activities.
User Contributed Comments 2
| User | Comment |
|---|---|
| danlan | II is operating because it's for inventory; cash payments for long term asset are investing activities. |
| sarath | Inventory is typically a short term asset , so operating cash flow...under the investing activities we consider the long term assets.. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data
CFA® 2024 Level I Curriculum, Volume 2, Module 4.