Explain the Term "Affect

question 41

Short Answer

Explain the term "affect."

Differentiate between cash flows from operating, investing, and financing activities.

Identify positive and negative cash flow effects from changes in balance sheet items.

Use the direct and indirect methods for reporting cash flows from operating activities.

Recognize transactions that influence cash flow but do not affect the income statement.

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Definitions:

Temporary Account

A temporary account is used to track transactions during an accounting period, which is then transferred to a permanent account at the period's end, such as revenue and expense accounts.

Bad Debts Expense

Represents the amount of receivables a company does not expect to collect and is recorded as an expense.

Merchandise Inventory

The goods a company holds for the purpose of sale to customers in the normal course of business.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, reflecting the actual cash value of inventory.