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8 Cards in this Set

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What is a pro forma cash flow statement?
a prediction of what the actual cash flow statement will look like in future years if the operating, investing and financing plans are implemented.
What does a statement of cash flows explain? ,
What is a cash equivalent?
A short-term highly liquid investment that can be converted easily into cash. It muse be 1.Readily convertible to cash and 2. So near to its maturity that there is insignificant risk of changes in value due to changes in interest rates. Only investments with original maturities of 3 months or less qualify. Includes U.S. Treasury obligations- Money market funds and Commercial paper.
Does a 3-month U.S. Treasury bill and a 3-year Treasury note purchased 3 years ago, would it qualify as a cash equivalent during the last 3 months prior to its maturity?
No, they must have been purchased less than 3 months prior to their maturity.
In a statement of cash flows prepared using the direct method, if wages payable increased during the year, the cash paid for wages would be:
decreased.
In a statement of cash flows, if equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment:
is decreased from net income.
In the Indirect method, explain the cash from Operating Activities.
What is the formula used in showing increase and decrease in Net cash flow from operations – Indirect method?