Chapter 12

Question 1

Ratio of operating cash flows to average total assets; not sensitive to income recognition and measurement; partly reflects earnings quality.

Answer 1

CASH FLOW ON TOTAL ASSETS

Question 2

Presentation of net cash from operating activities for the statement of cash flows that lists major operating cash receipts less major operating cash payments.

Answer 2

DIRECT METHOD

Question 3

Transactions with owners and creditors that include obtaining cash from issuing debt, repaying amounts borrowed, and obtaining cash from or distributing cash to owners.

Answer 3

FINANCING ACTIVITIES

Question 4

Presentation that reports net income and then adjusts it by adding and subtracting items to yield net cash from operating activities on the statement of cash flows.

Answer 4

INDIRECT METHOD

Question 5

Transactions that involve purchasing and selling of long-term assets, includes making and collecting notes receivable and investments in other than cash equivalents.

Answer 5

INVESTING ACTIVITIES

Question 6

Activities that involve the production or purchase of merchandise and the sale of goods or services to customers, including expenditures related to administering the business.

Answer 6

OPERATING ACTIVITIES

Question 7

A financial statement that lists cash inflows (receipts) and outflows (payments) during a period; arranged by operating, investing, and financing.

Answer 7

STATEMENT OF CASH FLOWS