Match the terms with the definitions.
-Transactions involving the purchase and sale of long-term assets, investments in debt and equity securities, and lending money and collecting the principal on the related items.
A)cash equivalents
B)direct method
C)financing activities
D)indirect method
E)investing activities
F)noncash investing and financing activities
G)operating activities
H)statement of cash flows

Question

Quizplus · Accepted Answer

Investing activities involve transactions involving the purchase and sale of long-term assets, investments in debt and equity securities, and lending money and collecting the principal on the related items.

Answer: C
 Financing activities involve transactions related to raising or paying for funds, such as issuing stock, paying dividends, and borrowing and repaying loans.

Answer: H
 The statement of cash flows is a financial statement that summarizes a company's cash transactions over a specific period of time, typically broken down into operating, investing, and financing activities.

Answer: F
 Noncash investing and financing activities refer to transactions that do not involve the actual exchange of cash, such as issuing stock for the acquisition of a company or exchanging debt for equity.

Answer: G
 Operating activities involve the company's core business operations, such as selling goods or services and collecting payments, and the resulting cash inflows and outflows.

Answer: B
 The direct method is a way of presenting the cash flows from operating activities that reports each individual cash inflow and outflow, while the indirect method starts with net income and adjusts for non-cash items to arrive at operating cash flows.

Answer: A
 Cash equivalents are highly liquid assets that can be easily converted into cash and are typically held as short-term investments, such as money market funds or treasury bills.

Match the Terms with the Definitions