Why Is the Operating Activities Section Often Believed to Be

question 89

Multiple Choice

Why is the operating activities section often believed to be the most important part of a statement of cash flows?

• A) It gives the most information about how operations have been financed.
• B) It shows the dividends that have been paid to shareholders.
• C) It indicates a company's ability to generate cash from sales to meet current cash needs.
• D) It shows the net increase or decrease in cash during the period.

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Definitions:

Transfer Ownership

The act of transferring the rights, title, and interest in property or assets from one party to another, usually through sale, gift, or inheritance.

Dividends

A share of profits distributed by a corporation to its shareholders, typically made as a fixed payment per share of stock.

Free Market Ethical Perspective

An ethical viewpoint that emphasizes the importance of allowing markets to operate without undue government interference, advocating for voluntary transactions and individual liberty.

Utilitarianism

A philosophical theory that posits the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.