When the Indirect Method Is Used to Determine Operating Cash

question 43

Multiple Choice

When the indirect method is used to determine operating cash flows,how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows?

• A) as an operating activity
• B) as an investing activity
• C) as a financing activity
• D) as a noncash investing or financing activity

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Definitions:

Physical Capital

Physical capital refers to tangible assets used in the production of goods and services, such as machinery, buildings, and equipment.

Terms of Trade

The ratio at which a country's exports exchange for its imports, affecting the economy's health.

Heckscher-Ohlin Theorem

An economic theory stating that countries export what they can most efficiently and plentifully produce, based on their factor endowments of labor, land, and capital.

Trade Flows

The movement of goods and services between countries or regions, highlighting the patterns and volumes of trade.