Financing Activities on the Statement of Cash Flows Affect the Long-Term

question 77

True/False

Financing activities on the statement of cash flows affect the long-term liability and equity accounts, such as Long-Term Notes Payable, Bonds Payable, Common Stock, and Retained Earnings.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is available to cover fixed expenses and to contribute to profit.

Variable Administrative Expenses

Costs that vary in proportion to changes in an organization's activity level, such as sales commissions.

Sunk Cost

A cost that has already been incurred and cannot be recovered, and hence should not influence future business decisions.

Sunk Cost

Costs that have already been incurred and cannot be recovered or reversed.