The Top-Down Approach to Computing the Operating Cash Flow

question 78

Multiple Choice

The top-down approach to computing the operating cash flow

• A)applies only if a project produces sales.
• B)ignores all noncash items.
• C)can only be used if the entire cash flows of a firm are included.
• D)is equal to (Sales − Costs − Taxes + Depreciation).
• E)includes the interest expense related to a project.

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Definitions:

Transaction Effects

The impact of business transactions on the financial statements, including assets, liabilities, and equity.

Advertising Brochure

A printed promotional document used to introduce a company, product, or service to potential customers.

Recording Process

The systematic method of capturing and documenting financial transactions and events in the accounting records of an organization.

Trial Balance

A bookkeeping worksheet listing the balance of all ledgers in two columns, debits and credits, used to ensure that the sum of debits equals the sum of credits.