A Disadvantage of the Indirect Method of Reporting Cash Flows

question 88

True/False

A disadvantage of the indirect method of reporting cash flows provided (used) by operating activities is that the difference between the net amount of cash flows from operating activities and profit is not emphasized.

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Definitions:

Market Wage

The average or prevailing wage rate for a specific job in a particular market or industry.

Surplus

The condition that occurs when the quantity of a good or service supplied exceeds the quantity demanded at the current price, often leading to a decrease in prices.

Competitive Markets

Markets where there are many buyers and sellers, ensuring no single entity can dictate prices or market conditions.

Supply And Demand

The fundamental economic model that determines the price of goods and services in a market, based on the quantity available (supply) and the desire for them (demand).