Operating, Investing, and Financing Activities Affect Certain Balance Sheet Accounts

question 54

Multiple Choice

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

• A) Operating activities primarily involve transactions which affect noncurrent assets.
• B) Investing activities primarily involve U.S.government securities and long-term productive assets.
• C) Financing activities primarily involve transactions which affect current liabilities.
• D) Different balance sheet accounts are affected depending on whether the direct or indirect method is used.

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Definitions:

Solvent

In a financial context, the state of being able to meet all monetary obligations; having assets in excess of liabilities.

Restricted

Limited in extent, number, scope, or action.

Endowment Principal

The core capital in an endowment, which is invested to generate income while preserving the original amount.

Payout

The process of distributing funds by foundations and trusts to meet legal requirements or fulfill their mission.