In Preparing a Company's Statement of Cash Flows for the Most

question 32

Multiple Choice

In preparing a company's statement of cash flows for the most recent year on the indirect method, the following information is available: Net cash provided by operating activities was:

• A) $120,000.
• B) $44,000.
• C) $70,000.
• D) $84,000.
• E) $30,000.

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Definitions:

Implicit Costs

Costs that represent foregone opportunities, such as the income a business owner forgoes by investing in their own company instead of elsewhere.

Explicit Costs

Directly incurred expenses in the operation of a business, such as wages, rent, and material costs, which are clearly accounted for and easy to identify.

Opportunity Costs

The potential benefits missed out on when choosing one alternative over another.

Explicit Costs

Direct, out-of-pocket payments for goods or services that are made by a business as part of its operations.