Match the terms with the definitions.
-Transactions and events associated with selling a product or providing a service. They are related to the revenues and expenses reported on the income statement.
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

Operating activities are the transactions and events related to selling a product or providing a service that affect revenues and expenses reported on the income statement.

Answer: H
 The statement of cash flows reports on the cash flows from operating, investing, and financing activities, as well as any noncash investing and financing activities.

Answer: F
 Noncash investing and financing activities are reported in the statement of cash flows, but they do not involve actual cash inflows or outflows.

Answer: E
 Investing activities involve the buying and selling of long-term assets, such as property, plant, and equipment or investments in securities.

Answer: C
 Financing activities involve transactions related to obtaining or repaying funds from lenders or investors, such as issuing stock, paying dividends, or taking out loans.

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

Answer: B
 The direct method is a way of reporting cash flows from operating activities that shows the actual cash inflows and outflows related to specific operating activities. The indirect method starts with net income and adjusts for changes to noncash items to arrive at the cash flows from operating activities.

Match the Terms with the Definitions