When Reading the Cash Inflows from Operating Activities Portion of the Statement

question 36

Multiple Choice

When reading the Cash Inflows from Operating Activities portion of the statement of cash flows using the direct method, you would expect to find which of the following? I. Collections from customers
II. Interest and dividends collected
III. Other operating receipts
IV. Receipts from stockholders

• A)I
• B)I and IV
• C)I, II, and III
• D)I, II, III, and IV

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, indicating the ownership equity spread among shareholders.

Fixed Asset Turnover Ratio

A performance metric that measures a company's efficiency in using its fixed assets to generate sales, calculated as net sales divided by the average net fixed assets.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting its consumption or wear and tear.

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a standard framework of guidelines for financial accounting used in any jurisdiction.