CFA Practice Question

There are 86 practice questions for this study session.

CFA Practice Question

A statement of cash flows would be least useful in answering which of the following questions?

A. What was the average balance in the cash account during the period?
B. Did operating activities result in a positive or negative net cash flow?
C. How much cash was provided or used by financing activities during the period?
D. Were cash dividends paid by the company more or less than the net cash flow from operations?
Correct Answer: A

User Contributed Comments 12

User Comment
kalps A is particularly true for financial services companies such as managed funds
quincy Choice A should be least useful. That information can be best found in Balance Sheet.
danlan Cash flow is more for the "flow", not the balance
sarath Good point that cash flow is more for the flow of the actual cash not the balance of the various accounts...
nike12 Why would this be more true for managed funds?
endeca You can get the answer to A from the balance sheet. Answers to B to D can be found from the statement of cash flows.
ilgibe the balance sheet does not state average figures for cash balances!
dravinskis The Balance Sheet would show the cash balance at that point in time and the cash balance for the same point in time in the prior year. The average of the two would be the average balance of cash during the period.
sh21 yeap, yeap!
bantoo yaa! cashflow is more about flow of cash and basically gives overall picture of liquidity, financial flexibilitry.
vatsal92 A! Because you can ascertain average balance of Cash a/c by adding Op. Stock of cash + Cl. Stock of cash divided by 2. No need of cash flow statement.
F79KHAN You guys are correct, I feel that ultimately the question is referring to what purpose cash flow serves and that would more relate to the changes as oppose to the actual balance itself.
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