Which Statement Is True with Respect to the Preparation of the 'Cash

question 16

Multiple Choice

Which statement is true with respect to the preparation of the 'cash flows from operating activities' section of the statement of cash flows?

• A)It is based on accrual income.
• B)Operating cash flows are the difference between revenues and expenses.
• C)It can be prepared using the direct or indirect methods.
• D)Cash payments for depreciation are reported in the operating activities section.

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Definitions:

Cash Flow Statement

A financial statement detailing the inflows and outflows of cash and cash equivalents, showing how well a company manages its cash position.

Operating Activities Cash Flows

Cash inflows and outflows related to the core business operations of an entity.

Income Statement

An Income Statement is a financial statement that shows a company's revenues and expenses over a specific period, culminating in net profit or loss.

Delivery Service Revenue

Income earned from providing delivery services to customers, part of operating revenue for businesses in the delivery industry.