Which Financial Statement Matches Asset Increases from Operating a Business

question 38

Multiple Choice

Which financial statement matches asset increases from operating a business with asset decreases from operating the business?

• A)Balance sheet
• B)Statement of changes in equity
• C)Income statement
• D)Statement of cash flows

---

Definitions:

Average Variable Cost

The total variable costs (costs that vary with production volume) divided by the quantity of output produced, representing the variable cost per unit.

Net Present Value (NPV)

The difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's used to evaluate the profitability of an investment or project.

Capital Investment Funds

Financial resources that are used by a company to purchase physical assets like property, industrial buildings, or equipment.

Capital Rationing

The situation that exists if a firm has positive Net Present Value projects but cannot find the necessary financing.