The Direct Method of Statement of Cash Flows Preparation Is

question 34

Multiple Choice

The direct method of Statement of Cash Flows preparation is

• A) widely used in practice.
• B) preferred by standard setters.
• C) easier to read and interpret than the indirect method.
• D) inconsistent and provided different operating results.

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Definitions:

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Externality

A consequence of an economic activity experienced by unrelated third parties; can be either positive or negative.

Resource Dependency

A theory in organizational studies that describes how external resources dictate the behaviors and strategies of organizations.

External Constituencies

Groups or individuals outside an organization that are affected by its decisions and actions, such as customers, suppliers, and the community.