When Preparing the Operating Activities Section of the Statement of Cash

question 21

True/False

When preparing the operating activities section of the statement of cash flows, both FASB and IASB prefer the direct method over the indirect method.

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Definitions:

GDP Deflator

An indicator of the price levels for all newly produced domestic final goods and services within an economy, utilized for transforming nominal GDP into real GDP.

Inflation

A universal surge in prices and a dip in the value of monetary assets.

Real GDP

The measure of a country's economic output adjusted for price changes or inflation.

Value Added

The increase in the value of a product or service as a result of a particular process, excluding the costs of raw materials and energy.