In Developing the Cash Flows from Operating Activities Most Companies

question 158

Multiple Choice

In developing the cash flows from operating activities most companies in the U. S.

• A) use the direct method.
• B) use the indirect method.
• C) present both the indirect and direct methods in their financial reports.
• D) prepare the operating activities section on the accrual basis.

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Definitions:

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.

Net Income

Net Income is the total profit of a company after all expenses have been deducted from revenues.

Effective Tax Rate

The average rate at which an individual or a corporation is taxed, calculated by dividing the total tax by the taxable income.

Tax Expense

The total amount of taxes owed by an individual or corporation as a result of taxable activities or income during a fiscal year.