Which of the Following Statements Is Most Likely to Be

question 111

Multiple Choice

Which of the following statements is most likely to be right?

• A)The method of preparing the operating activities section of a statement of cash flows which adjusts net income to remove the effects of deferrals and accruals for revenues and expenses is the direct method.
• B)The method of preparing the operating activities section of a statement of cash flows which reports major classes of gross cash receipts and cash payments for revenues and expenses is the indirect method.
• C)The FASB prefers the indirect method of preparing the operating activities section of the statement of cash flows.
• D)Most companies use the indirect method of preparing the operating activities section of the statement of cash flows.

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Definitions:

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, providing an overview of its financial performance and health.

Leasing Paradox

The phenomenon where leasing an asset may be more advantageous than purchasing it, despite leasing being more expensive in the long term.

Zero-Sum Game

A situation in game theory where one participant's gain or loss is exactly balanced by the losses or gains of the other participants.

Leasing Reasons

Various motivations for engaging in leasing, such as financial flexibility, tax advantages, preservation of capital, and access to up-to-date assets.