Why Is the Operating Activities Section Often Believed to Be

question 116

Multiple Choice

Why is the operating activities section often believed to be the most important part of a statement of cash flows?

• A) It indicates a company's ability to generate cash from sales to meet current cash needs.
• B) It shows the net increase or decrease in cash during the period.
• C) It gives the most information about how operations have been financed.
• D) It shows the dividends that have been paid to shareholders.

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Definitions:

Profit-Maximizing

The procedure through which a corporation decides on the price and the amount of production that yields the most profit.

Pure Monopolist

A market structure in which a single seller controls the entire supply of a good or service, and where the entry of new competitors is prevented or highly restricted.

Profit-Maximizing Price

The price level at which a company can achieve the highest possible profit, considering its cost structure and demand for its products.

Major League Baseball

Major League Baseball is a professional baseball organization and the oldest of the major professional sports leagues in the United States and Canada.