For Each of the Following Items, Indicate (By Placing an X)

question 12

Essay

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
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Understand the tools and techniques of financial analysis, including ratio, horizontal, and vertical analysis.

Understand the concepts of profitability, solvency, and liquidity in financial context.

Identify and apply different standards for financial statement analysis including intra-company, competitor, and industry standards.

Distinguish between unusual and frequent gains and losses in financial reports.

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change.

Segmented Income Statement

A financial statement that breaks down revenue, expenses, and profits by specific segments, departments, or products within a company.

Contribution Format

A method of income statement presentation where all variable costs are subtracted from sales to find the contribution margin, followed by the deduction of fixed costs to determine net operating income.

Traceable Fixed Expenses

Fixed costs directly associated with a specific department or product, which would disappear if the department or product were eliminated.