Which of the Following Statements Regarding the Calculation of Cash

question 110

Multiple Choice

Which of the following statements regarding the calculation of cash flows from operating activities under the direct method is true?

• A)When the direct method is used,each revenue and expense account on the income statement is individually examined to calculate the cash flows from operating activities.
• B)Noncash revenues and expenses must be included in cash flows from operating activities when preparing a statement of cash flows using the direct method.
• C)Depreciation is reported as a cash inflow in the cash flows from operating activities when the direct method is used.
• D)A loss on the sale of a long-term asset is subtracted in the cash flows from operating activities when the direct method is useD.The direct method converts revenues to cash receipts and expenses to cash disbursements in order to determine the net cash flow from operating activities.Noncash revenues and expenses,including gains and losses,are not used in the calculation of operating cash flows using the direct method.

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Definitions:

Fine Particles

Very small solid or liquid particles found in the air or emissions that can pose health risks when inhaled.

Dissolved

The process by which a substance is integrated into a liquid making it part of the liquid's composition.

Over-The-Counter

Refers to medicines and products available for purchase without a prescription from a healthcare professional.

General Population

The total number of individuals or inhabitants in a specified area or community, without excluding any subgroups.