Which of the Following Observations Concerning the Comparisons Between the Direct

question 13

Multiple Choice

Which of the following observations concerning the comparisons between the direct and indirect approaches of presenting a cash flow statement is true?

• A) The final number of cash flows from operating activities is different under the two approaches.
• B) The direct approach provides a clearer picture of cash flows related to operations.
• C) Authoritative bodies have generally expressed a preference for the indirect method.
• D) A separate reconciliation of operating cash flows and net income is required under the indirect approach.

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Definitions:

Product Departmentation

An organizational structure where departments are created based on the products or product lines they manage or produce.

Strengths

The inherent capabilities or positive qualities that an individual possesses, which are beneficial for performing certain tasks or solving problems.

Organizational Customers

Entities, such as businesses, governments, or non-profits, that purchase goods or services from another organization for internal use, resale, or to support their operations.

Functional Departmentation

The process of dividing an organization into departments or units based on the functions or roles they perform.