1. Under U.S. GAAP, cash interest from investments is reported on the statement of cash flows as part of investing activities whereas under IFRS, cash interest from investments is reported as part of financing activities.

True or False?

2. Under the direct method for cash flow statement preparation, net cash flows from operating activities is calculated by adjusting net income for the differences between accrual-basis revenues and expenses and cash inflows and outflows during the period.

True or False?

3. It is permissible for a firm that reports in accordance with IFRS to emphasize its liquidity by placing current assets and current liabilities in close proximity to one another on the balance sheet.

True or False?

4. Stanley is considering investing in a fast-growing toy manufacturing companySpiele Inc. Stanley is aware of recent lawsuits involving the safety of trendy new toys manufactured by one of Spieles primary competitors. He reviews Spieles comparative balance sheet and discovers that the company did not report any estimated loss liabilities for the current and previous fiscal years. Based on this information, Stanley should feel confident that Spiele Inc. has no pending loss litigation.

True or False?

5. Liquidity refers to how quickly noncurrent assets will be converted into cash to pay liabilities.

True or False?