Ch 17 The Cash Flow Statement

Question 1

cash flow statement

Answer 1

A financial statement that gives information about a company’s cash receipts and cash payments during a period and classifies them as operating, investing, and financing activities. (p. 890)

Question 2

direct method

Answer 2

A method of determining the net cash provided (used) by operating activities by adjustment each item in the income statement from the accrual basis to the cash basis. (p. 893)

Question 3

financing activities

Answer 3

Cash flow activities from long-term liability and equity accounts. These include:

(a) obtaining cash by issuing debt and repaying the amounts borrowed, and
(b) obtaining cash from shareholders and providing them with a return on their investment. (p. 891)

Question 4

free cash flow

Answer 4

Cash provided by operating activities less cash used by investing activities. (p. 920)

Question 5

indirect method

Answer 5

A method of preparing a cash flow statement in which profit is adjusted for items that did not affect cash, to determine net cash provided (used) by operating activities. (p. 893)

Question 6

investing activities

Answer 6

Cash flow activities from long-term asset accounts. These include:

(a) acquiring and disposing of investments and long-lived assets, and
(b) lending money and collecting on those loans. (p. 891)

Question 7

operating activities

Answer 7

Cash flow activities that include the cash effects of transactions that create revenues and expenses, and thus affect profit. (p. 891)