The Indirect and Direct Methods of Preparing the Cash Flow

question 89

Multiple Choice

The indirect and direct methods of preparing the cash flow statement are identical except for the

• A) operating activities section.
• B) investing activities section.
• C) financing activities section.
• D) significant noncash activity section.

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Definitions:

Sales

The total amount of goods or services sold by a company, constituting its main source of revenue.

Accounts Receivable Period

The average number of days it takes for a business to collect payments from its credit sales.

Collect

To gather or accumulate money or assets from various sources, often including outstanding debts or payments.

Estimated Quarterly Sales

Predictions or projections of the sales volume a company expects to achieve in a quarter.