Which of the Following Is Not True with Regard to the Preparation

question 22

Multiple Choice

Which of the following is not true with regard to the preparation of a cash flow statement?

• A) Cash flows are categorized by operating, investing, and financing activities.
• B) The changes in all income statement accounts are calculated and then listed as cash inflows or outflows.
• C) The direct method or the indirect method may be used to prepare the statement of cash flows.
• D) The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash.

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Definitions:

Development Expenditures

Costs incurred in the research and development of new products or services, which are often capitalized and amortized over time.

Expected Benefit Approach

A method used in accounting for pensions that allocates the cost of pensions over the years during which employees earn their pension benefits.

Discounted Present Value

A valuation method that calculates the current worth of a future cash flow, taking into account the time value of money.

Indefinite-Lived Intangibles

Non-physical assets without a fixed lifespan, such as trademarks or brand names, that a company does not amortize over time.