chapter 17 vocab

Question 1

direct method

Answer 1

shows operating cash receipts and payments, making it more consistent with the objective of the statement of cash flows.

Question 2

financing activities

Answer 2

(a) obtaining cash from issuing debt and repaying the amounts borrowed and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends.

Question 3

free cash flow

Answer 3

Net cash provided by operating activities adjusted for capital expenditures and dividends paid.

Question 4

indirect method

Answer 4

A method of preparing a statement of cash flows in which net income is adjusted for items that do not affect cash, to determine net cash provided by operating activities.

Question 5

investing activities

Answer 5

(a) purchasing and disposing of investments and property, plant, and equipment using cash and (b) lending money and collecting the loans.

Question 6

operating activities

Answer 6

Cash flow activities that include the cash effects of transactions that create revenues and expenses and thus enter into the determination of net income

Question 7

statement of cash flows

Answer 7

A basic financial statement that provides information about the cash receipts, cash payments, and net change in cash during a period, resulting from operating, investing, and financing activities.