In a Statement of Cash Flows, a Change in Prepaid

question 7

Multiple Choice

In a statement of cash flows, a change in prepaid expenses would be classified as:

• A) an operating activity.
• B) a financing activity.
• C) an investing activity.
• D) a noncash item that need not appear on the statement of cash flows.

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Definitions:

Stockholders' Approval

The formal consent given by shareholders for certain corporate actions, often required by law or corporate bylaws.

Cash Dividends

Cash distributions made to shareholders by a company out of its earnings.

Stockholders' Equity

Stockholders' Equity refers to the residual interest in the assets of a corporation after deducting liabilities, represented by capital stock, retained earnings, and possibly other components.

Increase Expenses

Refers to the rise in costs or expenditures that a company may experience as part of its operations.