On the Statement of Cash Flows, the Operating Activities Section

question 38

Multiple Choice

On the statement of cash flows, the operating activities section prepared using the direct method would include

• A)receipts from the issue of common shares.
• B)receipts from the sale of investments.
• C)payments for the acquisition of investments.
• D)cash receipts from sales activities.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear, and tear over time.

Straight-Line Method

A method of calculating the depreciation of an asset that allocates an equal amount of depreciation each year over the asset's useful life.

Book Value

The value of an asset as it appears on a company's balance sheet, calculated as the cost of the asset minus accumulated depreciation or impairment.

Consolidated Financial Statements

Financial statements that show the aggregate of a parent company and its subsidiaries, presenting the financial results and position as if the group were a single entity.