Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A) The statement of cash flows should include changes in summary accounts,such as current assets and current liabilities,as well as changes in all individual accounts.
• B) If a firm sells equity to reduce long-term bonds,this is a capital financing transaction and does not appear on the statement of cash flows.However,if the firm sells equity in order to purchase assets,this transaction would be included in the statement of cash flows.
• C) Net income is normally the firm's primary operating cash flow,but changes in accounts payable,accounts receivable,inventories and accruals are also classified as operating cash flows.
• D) Each change on the balance sheet results from one of two types of transactions,either financing activities,such as issuing or retiring new stock or debt,or long-term investment,such as buying and selling assets.
• E) The change in the firm's liquidity position is measured by how much greater a firm's sources of funds are than its uses of funds.

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Definitions:

Employees

Individuals who are hired by a company or organization to perform specific duties in exchange for compensation.

Population Standard Deviations

The square root of the variance of a set of values, which quantifies how much the members of a population differ from the population mean.

Test Statistic

A value calculated from sample data during a hypothesis test. It is used to decide whether to reject the null hypothesis.

P-value

The likelihood of achieving equally extreme or more extreme test results than those observed, with the presupposition that the null hypothesis is correct.