Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A) The statement of cash flows should include changes in summary accounts,such as current assets and current liabilities,as well as changes in all individual accounts.
• B) If a firm sells equity to reduce long-term bonds,this is a capital financing transaction and does not appear on the statement of cash flows.However,if the firm sells equity in order to purchase assets,this transaction would be included in the statement of cash flows.
• C) Net income is normally the firm's primary operating cash flow,but changes in accounts payable,accounts receivable,inventories and accruals are also classified as operating cash flows.
• D) Each change on the balance sheet results from one of two types of transactions,either financing activities,such as issuing or retiring new stock or debt,or long-term investment,such as buying and selling assets.
• E) The change in the firm's liquidity position is measured by how much greater a firm's sources of funds are than its uses of funds.

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Definitions:

Conditioned Fear

A learned response to a previously neutral stimulus that becomes associated with a fearful event.

Spacing Effect

The phenomenon where learning is more effective when study sessions are spaced out over time rather than crammed in a short period.

Rehearsal

A cognitive process in which information is repeated mentally or out loud to maintain it in short-term memory or to encode it for long-term memory.

Encoding

The method of transforming data into a format that enables its storage in our memory.