Which of the Three Types of Activities Reported on the Statement

question 52

Multiple Choice

Which of the three types of activities reported on the statement of cash flows is the MOST critical for a company's long-term survival?

• A)investing activities
• B)operating activities
• C)financing activities
• D)noncash investing and financing activities

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Definitions:

Credit Extension

Credit extension is the process by which a lender provides funds or permits a borrower to purchase goods or services now with the promise to pay in the future.

Receivables Financing

A type of financing where a company uses its accounts receivable as collateral for a loan.

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, depreciation, and opportunity costs.

Economic Order Quantity

A formula used in inventory management to determine the optimal order size that minimizes total costs related to acquiring, holding, and replenishing inventory.