Which of the Following Would Be Included in the "Cash

question 52

Multiple Choice

Which of the following would be included in the "cash flow from operating activities" section of the statement of cash flows?

• A)Accrual of salary expense at year-end.
• B)Purchase of land for cash.
• C)Payments of cash dividends to the owners of the business.
• D)Cash paid for interest on a note payable.

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Definitions:

Times Interest Earned

Measures a company’s ability to meet interest payments as they come due; computed by dividing the sum of net income, interest expense, and income tax expense by interest expense.

Income Statement

Financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income or loss.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Debt to Assets Ratio

A financial ratio that measures the percentage of a company's assets that are financed by debt, used to gauge a company's financial leverage.