- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 23. Understanding Cash Flow Statements
- Subject 1. Classification of Cash Flows and Non-Cash Activities
CFA Practice Question
Which of the following statements related to the Statement of Cash Flows is false?
A. The purchase of treasury stock for cash would be reported in the investing activities section.
B. The Statement of Cash Flows is particularly useful since both the income statement and the balance sheet are prepared on an accrual basis rather than a cash basis.
C. All significant non-cash investing and financing activities should be reported in a supplemental schedule.
Explanation: This statement is false because treasury stock involves a company's own shares and thus would be classified as a financing activity.
User Contributed Comments 2
| User | Comment |
|---|---|
| kalps | treasury stock - i.e. companies own stock (not govt !!) is classed as financing activity not investing activity |
| murli | Note that non-cash CF transactions to be reported in a supllemental schedule. |