When a Company Uses the Direct Method to Determine the Cash

question 31

Multiple Choice

When a company uses the direct method to determine the cash flows from operating activities, cash flows from operating activities will:

• A) be identical to the amount reported using the indirect method.
• B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
• C) always be larger than the amount reported using the indirect method.
• D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect methoD.
• The direct method and the indirect method produce the same result for net cash provided by or used in operating activities.

---

Definitions:

Levator Muscle

A group of muscles used in the body for various functions including lifting, such as the Levator ani in the pelvis.

Part

A section or portion of something that is separate from the whole.

Connective Tissues

Types of tissue in the body that maintain the form of organs and provide cohesion and internal support.

Muscles

Tissues in the body that contract to produce movement or maintain the position of parts of the body.