A Disadvantage of the Indirect Method of Reporting Cash Flows

question 28

True/False

A disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net earnings is not emphasized.

---

Definitions:

Role Continuity Principle

A psychological principle suggesting that individuals are more likely to maintain a consistent self-concept and psychological well-being when they can maintain consistent social roles over time.

Consistent Over Time

A principle stating that certain attributes, behaviors, or patterns remain stable across different periods in an individual's life.

Social Roles

The parts individuals play as members of a social group, which meet the expectations, behaviors, and actions that society ascribes to them.

Cumulative Continuity Principle

The idea that personality becomes more stable and unchanging as a person gets older.