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:

Practical

Focused on what is actually effective or achievable; concerned with the actual doing or use of something rather than with theory and ideas.

Shopping Trips

Organized or spontaneous visits to retail outlets for the purpose of purchasing goods.

Role Identities

The aspects of an individual's identity that are derived from their roles in society, such as their job or parental status.

Profit Centres

Segments or units within an organization that are responsible for generating revenue and are assessed based on their profitability.