Question

Internal users of the statement of cash flows use cash flow information to: a. all of the statements are true b. plan day-to-day operating activities c. make long-term investments d. determine whether additional financing is required e. None of the statements are true

Answer 1

Correct answer is a i.e all the statements are true.

Internal users of statement of cash flows uses cash flow information to-

1. Plan day to day operating activities because it helps the management to know the level of working capital it needs during its operating cycle.

2. Cash flows helps to plan the purchases of long term investments because investments requires a large amount of cash and cash flow helps to make proper cash planning.

3. It helps management to know the cash balance existing with the organization and how much cash would be needing for continuing the working of the organization.