Which of the Following Statements Regarding the Inclusion of Liabilities

question 2

Multiple Choice

Which of the following statements regarding the inclusion of liabilities on the statement of cash flows is true?

• A) All current liabilities affect the operating activities section.
• B) Long-term liabilities generally affect the investing activities section.
• C) A decrease in a current liability from the beginning to the end of the year is accompanied by a decrease of cash.
• D) A decrease in a current liability from the beginning to the end of the year is accompanied by an inflow of cash.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, included as part of its financial statements.

Other Comprehensive Income

Income that is not included in net income and includes items like foreign currency translation adjustments and unrealized gains or losses on investments.

Discontinued Operations

Components of a business, such as divisions or subsidiaries, that have been sold or otherwise disposed of, or are held for sale.

Selling and Administrative Expenses

Combined costs associated with the selling of products or services and the management of the company.