When the Operating Activities Section of the Statement of Cash

question 33

Multiple Choice

When the operating activities section of the statement of cash flows is reported using the direct method:

• A)Net income is adjusted for changes in noncurrent assets and noncurrent liabilities.
• B)Operating cash receipts minus operating cash payments equals net cash provided (used by)operating activities.
• C)Footnotes to the financial statements disclose the difference between net income and the cash provided or used by financing activities.
• D)The income statement is prepared under the cash basis of accounting.
• E)Noncash investing and financing activities is included in the statement of cash flows.

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Definitions:

Air Travel

The act of traveling in an aircraft, often commercially, where passengers are transported from one location to another.

Law of Demand

Economic principle stating that as the price of a good increases, the quantity demanded decreases, and vice versa, ceteris paribus.

Ticket Prices

The cost at which an individual can purchase a ticket to gain entry to an event, such as a concert, movie, or sports game.

Input Costs

Expenses incurred by firms for purchasing the raw materials, labor, and other inputs required for the production of goods or provision of services.