On a Statement of Cash Flows, Which of the Following

question 107

Multiple Choice

On a statement of cash flows, which of the following is a sign of a healthy company?

• A)Investing activities include more sales of long-term assets than purchases.
• B)Financing activities are dominated by borrowing.
• C)Operating activities are the major source of cash.
• D)Net cash provided by operating activities is less than net income.

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Definitions:

Unused Capacity

The available production or service facility that is not being used or is underutilized.

Fixed Overhead

Expenditures that are unaffected by changes in production or sales volume, including rental fees, employee salaries, and insurance premiums.

Job-Order Costing

An accounting method that assigns costs to specific production batches or jobs, useful in industries where goods or services are custom-produced.

Automated Shaper

A machine tool operated using automation for shaping wood, metal, or other materials, enhancing precision and productivity.