The Third (Final) Step in Preparing the Statement of Cash

question 59

Multiple Choice

The third (final) step in preparing the statement of cash flows is to

• A)analyze changes in noncurrent asset and liability accounts.
• B)compare the net change in cash with the change in the Cash account balances reported on the balance sheet.
• C)determine net cash provided by operating activities.
• D)list the noncash activities.

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Definitions:

Accounts Receivable

Balances owed to a company by its customers for goods or services provided on credit.

Direct Method

A costing method primarily used in cost accounting that allocates service department costs directly to production departments without any intermediate allocations.

Prepaid Expense

Payments made for goods or services to be received in the future, considered as an asset on the balance sheet until used or consumed.

Accrued Liabilities

Obligations that a company has incurred, for which it has not yet paid cash or issued payment during the accounting period.