Which of the Following Statements Regarding Use of the Direct

question 59

Multiple Choice

Which of the following statements regarding use of the direct and indirect methods of determining cash flows from operating activities is incorrect?

• A)The indirect method starts with net income.
• B)The direct method calculates cash collected from customers.
• C)The majority of U.S.companies use the indirect method.
• D)The FASB recommends use of the indirect method.

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Definitions:

Reason for Existence

The fundamental purpose or mission that justifies an organization’s or entity’s creation and operations.

Core Values

Fundamental beliefs or guiding principles that dictate behavior and action within an organization, shaping its culture and decisions.

Organisational Behaviour

The study of individuals and groups in organisations.

Peter Drucker

A pioneering management consultant, educator, and author, whose extensive writings on management practices and business philosophies have had a significant influence on modern organizational management.