Match These Terms with Their Correct Definition

question 36

Multiple Choice

Match these terms with their correct definition.
-Provides information that can be used to judge a company's ability to meet its obligations and pay dividends.

• A)Cash flow adequacy ratio
• B)Cash flows from financing activities
• C)Cash flows from investing activities
• D)Cash flow from operating activities
• E)Direct method
• F)Free cash flow
• G)Income statement
• H)Indirect method
• I)Noncash investing & financing activities
• J)Statement of cash flows

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Inelastic Resource Supply

A condition where the supply of a resource does not significantly change in response to price changes.

Total Variable Costs

The sum of all costs that vary with the level of output or production, such as materials and labor, as opposed to fixed costs which remain constant regardless of the level of production.

Average Fixed Cost

The steady costs associated with production, irrespective of output volume, divided by the number of units produced.