Match Each Term to Its Best Description or Definition

question 6

Multiple Choice

Match each term to its best description or definition.
-Vertical,common-size statement

• A)Full or partial statements expressed in percentages of a given base.
• B)Requires full financial statements on a quarterly basis.
• C)All statement figures are expressed as a percentage of a base figure from that year's statement.
• D)A breakdown by major lines of business,only required in SEC reporting.
• E)A breakdown by major lines of business.
• F)All statement figures are expressed as a percentage of base-year figures.
• G)Requires estimation of some expense items.
• H)A comparison of financial data over time.
• I)Visual aids to understanding financial data.

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Definitions:

Indirect Method

A technique used in cash flow statement preparation, adjusting net income for changes in accounts receivable, accounts payable, and depreciation to calculate cash flow from operating activities.

Operating Activities

Transactions and other events that enter into the determination of net income, including all activities not classified as investing or financing activities in cash flow analysis.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue.

Investing Activity

Transactions that involve purchasing or selling long-term assets and investments, which are reported in the investing section of a company's cash flow statement.