A Strong Statement of Cash Flows Indicates That Significant Cash

question 70

Multiple Choice

A strong statement of cash flows indicates that significant cash is being generated by:

• A)Operating activities.
• B)Financing activities.
• C)Investing activities.
• D)Effective tax planning.

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Definitions:

Ending Inventories

The final value of goods available for sale at the end of an accounting period, calculated through physical count or estimation.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material costs and direct labor.

Gross Profit

The income a business earns after subtracting the expenses related to the production and sale of its goods, or the expenses incurred in delivering its services.

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.