In Preparing the Statement of Cash Flows, Determining the Net

question 131

Multiple Choice

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

• A)the adjusted trial balance.
• B)the current period's retained earnings statement.
• C)a comparative balance sheet.
• D)a comparative income statement.

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Definitions:

Net Profit Margin

A financial metric showing the amount of each sales dollar left over after all expenses have been paid.

Cash Coverage Ratio

A financial metric used to evaluate a company's ability to pay its debt obligations using its cash and cash equivalents.

Current Liabilities

Obligations of a company that are due to be settled within one year or one operating cycle, whichever is longer.

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, generating most of the company's cash flows.