Changes in Current Assets and Current Liabilities Are Reported on the Statement

question 23

Multiple Choice

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the

• A) operating activities
• B) financing activities
• C) investing activities
• D) separate schedule of noncash activities

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Definitions:

MPS

Marginal Propensity to Save, which measures the fraction of additional income that is saved rather than spent on consumption.

Saving

The act of setting aside a portion of current income for future use, either by holding it as cash or putting it into investment accounts.

Disposable Income

Financial allotment for households' saving and spending requirements after income tax subtractions.

MPC

Marginal Propensity to Consume refers to the fraction of any additional income that is used for consumption purposes.