Which of the Following Statements Regarding the Reporting of Operating

question 33

Multiple Choice

Which of the following statements regarding the reporting of operating cash flows using the direct method is true?

• A)Although most U.S.companies use the indirect method,the Financial Accounting Standards Board (FASB)prefers the direct method of accounting for cash flows from operating activities.
• B)The FASB prefers the indirect method of calculating cash flows from operations because it gives a more accurate calculation of cash provided by operating activities.
• C)The direct method results in a larger amount of cash flow from operating activities than does the indirect method.
• D)The direct and indirect methods use different presentations for cash flows from investing and financing activities.

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Definitions:

Goods And Services

Goods are tangible items that satisfy human wants and needs, while services are intangible activities or benefits that one party can offer to another.