The Statement of Cash Flows May Assist in Determining the Ability

question 53

Multiple Choice

The statement of cash flows may assist in determining the ability of an entity to:

• A) Generate cash flows.
• B) Obtain internal finance.
• C) Meet its financial commitments to customers.
• D) Generate cash flows and meet its financial commitments to customers.
• E) All of the given answers.

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Definitions:

Factory Utilities

Expenses incurred for electricity, gas, water, and sewage services used in the operation of a manufacturing plant or factory.

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs to all units produced, regardless of the department in which they were made.

Labor Intensive

A process or industry that requires a large amount of labor to produce its goods or services, as opposed to being heavily automated.

Mechanized Work

Work processes that are performed using machinery and equipment to enhance efficiency and productivity.