Why Is the Operating Activities Section of the Statement of Cash

question 64

Multiple Choice

Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement?

• A) Because it shows the dividends that have been paid to stockholders.
• B) Because it indicates a company's ability to generate cash from sales to meet current cash payments for goods or services.
• C) Because shows the net increase or decrease in cash during the period.
• D) Because it gives the most information about how operations have been financed.

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Definitions:

Work Plan

A detailed outline of tasks, activities, and timelines for completing a project or objective.

Business Reports

Documents that present and analyze information relevant to the business environment, aiding in decision-making.

Business Plan

A document outlining a company's goals, strategies, and financial forecasts.

Direct Approach

A straightforward method of communication or action where intentions or demands are clearly stated.