- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 4. Analyzing Statements of Cash Flows I
- Subject 3. Cash Flows from Operating Activities: The Direct Method
CFA Practice Question
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.
Correct Answer: I and III
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.. |