A Potential Negative Side Effect of Placing a Heavy Emphasis

question 18

True/False

A potential negative side effect of placing a heavy emphasis on innovation is that the company collects many ideas of limited value.

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Definitions:

Financing Activities

Transactions involving external sources of funding, including equity, debt, dividends, and repayment of loans, that are reported in the cash flow statement.

Cash Dividends

payments made to shareholders out of a company’s profits, distributed as cash.

Increase in Income Taxes Payable

An accounting term referring to a rise in the amount of income taxes a company owes to the government, yet has not paid.

Direct Method

A cash flow statement preparation method that shows the specific sources of operating cash receipts and payments.