On the Statement of Cash Flows, the Sum of the Three

question 24

Multiple Choice

On the statement of cash flows, the sum of the three major components (operating activities, investing activities, financing activities) adds up to

• A)the change in the cash account balance between the beginning and ending of the period.
• B)net income for the period.
• C)the ending cash balance.
• D)the amount of cash inflow for the perioD.The total of operating, investing, and financing activities is equal to the net change in cash. It is then added to the beginning cash balance to equal ending cash balance for the period.

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Definitions:

Average Variable Cost

The cost that varies with the level of output, computed by dividing total variable costs by the quantity of output produced.

Total Cost

A comprehensive total of expenses involved in the creation of goods or services, covering both fixed and variable costs.

Diminishing Marginal Product

The principle that as additional units of a variable input are added to fixed inputs, the increase in output will eventually decrease.

Production Function

An equation expressing the relationship between inputs used in production and the output generated from those inputs.