The Format Followed in the Preparation of the Statement of Cash

question 61

Multiple Choice

The format followed in the preparation of the statement of cash flows is:

• A)cash flows from financing activities,cash flows from operating activities,cash flows from investing activities
• B)cash flows from operating activities,cash flows from investing activities,cash flows from financing activities
• C)cash flows from investing activities,cash flows from financing activities,cash flows from operating activities
• D)cash flows from investing activities,cash flows from operating activities,cash flows from financing activities

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Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services a business produces or sale, such as materials and labor.

Sales

The total amount of goods or services sold by a company within a specific period, generating revenue.

Operating Leverage

A financial ratio that measures the degree to which a firm can increase operating income by increasing revenue, highlighting the fixed versus variable costs structure.

Financial Leverage

The use of borrowed funds to increase the potential return on investment, amplifying both potential gains and losses.