Using the Direct Method

question 51

Multiple Choice

Using the Direct Method
For the following question(s) , indicate how each transaction described would be classified on a statement of cash flows if the operating activities section is prepared under the direct method.
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When using the direct method, where is the purchase of equipment for cash shown on the statement of cash flows?

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Noncash investing and financing activity

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Definitions:

Meteoroid Impacts

Collisions between a meteoroid (space rock) and Earth, which can cause craters and have significant geological and biological effects.

Weathering

The breakdown and alteration of rocks and minerals at the Earth's surface through physical, chemical, or biological processes.

Open-Pit Mine

A type of surface mining operation where rocks or minerals are extracted from a large open pit or borrow.

Underground Mine

A type of mine where the extraction of resources occurs below the Earth's surface, accessed through tunnels or shafts.