Question

When a transfer is made between cash and cash equivalents with no gain or loss, how is the transaction treated in the statement of cash flows?
a. It is included as an operating activity.
b. It is included as a noncash financing activity.
c. It is included as an investing activity.
d. It is not reported.

Answer 1

Answer:

d.it is not reported

Explanation:

Cash equivalents can be regarded as a highly liquid investments and can easily converted to amounts of cash that is is known, and are prone to insignificant risk incase of change in value. While Cash flows can be regarded as inflows and outflows of cash as well as cash equivalents. statement of cash flows are least useful by Creditors and investors for the assessment of their financial status at some point in time. It should be noted When a transfer is made between cash and cash equivalents with no gain or loss, the transaction is treated in the statement of cash flows by not reporting it