The Indirect Method of Preparing the Statement of Cash Flows

question 50

Multiple Choice

The indirect method of preparing the statement of cash flows:

• A) produces a different amount for cash flows from operating activities than the direct method
• B) produces a different amount for cash flows from investing activities than the direct method
• C) is more commonly used in practice than the direct method
• D) is preferred by IFRS and ASPE over the direct method

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Definitions:

Multiplication

A mathematical operation that calculates the total of one number added to itself a specified number of times.

Equivalent Fraction

Fractions that, although they have different numerators and denominators, represent the same part of a whole.

Division

A mathematical operation involving the process of dividing one number by another to find how many times the divisor fits into the dividend.

Division

The process of ascertaining how many times one number is contained within another.