Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.
• B) Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity.
• C) In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.
• D) In the statement of cash flows, depreciation charges are reported as a use of cash.
• E) In the statement of cash flows, a decrease in inventories is reported as a use of cash.

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Definitions:

Asset Account

An account that records the value of resources owned by an entity which have economic value and can provide future benefits.

Capital

Financial resources or assets owned by a business or individual used for creating wealth or generating income.

Net Sales

The final sales figure a company reports, after deducting returns, discounts, and compensations for damaged or missing products from its total sales.

Gross Sales

The total sales revenue of a company without deducting any sales returns, allowances, or discounts.