Upon Review of a Statement of Cash Flows, the Following

question 131

Multiple Choice

Upon review of a statement of cash flows, the following was noted: From this information, it is likely that the company is

• A)using cash from operations and selling long-term assets to pay back debt
• B)using cash from operations and borrowing to purchase long-term assets.
• C)using its profits to expand growth.
• D)using cash from investors to provide for operations.

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Definitions:

Exact Simple Interest

Exact simple interest is a calculation method where interest accrues on a principal sum at a constant rate over a specific time period, using a 365-day year for calculations.

365-Day Year

A method used in finance that assumes a year consisting of 365 days for calculating interest, ignoring leap years.

Exact Simple Interest

Interest calculated on the initial principal of a loan or deposit, based on a precise calculation method rather than the common approximation methods.

365-Day Year

A method used in finance and accounting that assumes a year consists of 365 days to simplify interest rate calculations, disregarding leap years.