Using the Direct Method

question 69

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 payment of a cash dividend 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:

Finance Charge

The fee that the seller charges for the privilege of buying on credit.

Previous Balance

The amount of money that was in an account or owed at the end of the last billing cycle.

Cycle Closing

The process of finalizing all transactions at the end of an accounting period to prepare for financial reporting.

Finance Charge

The total cost, including interest and other fees, associated with borrowing money or extending credit.