When Using the Indirect Method to Determine Operating Cash Flows

question 54

Multiple Choice

When using the indirect method to determine operating cash flows, how would the declaration and payment of cash dividends be shown on the Statement of Cash Flows?

• A)operating activities
• B)investing activities
• C)financing activities
• D)noncash investing and financing activity
• E)not reported on the statement of cash flows.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the goods' sensitivity to price changes.

Laffer Curve

A theory that illustrates the relationship between tax rates and the amount of tax revenue collected by governments.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is unattainable.

Tax Per Unit

A tax that is levied on a per unit basis, meaning for every unit of a good produced or sold, a certain amount of tax is paid.