Chapter 9

Question 1

Cash flow statement

Answer 1

Accounting report that summarises a business’ cash receipts, cash payments and net change in cash for a specific time period

Question 2

Operating activities

Answer 2

The primary activities of buying, selling and delivering goods for sale, as well as providing services

Question 3

Investing activities

Answer 3

Transactions that affect investments in non-current assets of the company

Question 4

Financing activities

Answer 4

Obtaining capital from the owner and providing the owner with a return on investment, as well as obtaining capital from creditors and repaying the amounts borrowed

Question 5

Direct method

Answer 5

Subtracting the operating cash outflows from the operating cash inflows to determine the net cash provided by (or used in) operating activities on the cash flow statement

Question 6

Indirect method

Answer 6

Adjusting net income to compute net cash provided by operating activities on the cash flow statement