Question

1. Which of the following is correct about the income statement: * It is an equation...

1. Which of the following is correct about the income statement: *

It is an equation used by financial analysts

It is an equation used by politicians

It is a report that shows the cash inflows and cash outflows of the company

It is a report that shows the revenues and expenses of the company

None of the above

2. Which of the following is correct about cash flows statement: *

It includes only the cash outflows

It shows the cash flows from operating, investing, and financing activities

It shows the profitability of the company

It is an optional statement reported by the company

None of the above

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Homework Answers

Answer #1

1. It is a report that shows the revenues and expenses of the company is correct about the income statement. We know that income statement shows the figure of incomes and expenses and the resultant the company has earned during the reporting period.

Answer: Option D

2. It shows the cash flows from operating, investing, and financing activities is correct about cash flows statement. We know that cashflow statement shows the cashflows arising out of three categories of activities namely operating, investing and financing activity.

Answer: Option B

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