For a Company Using the Direct Method, Both the Operating

question 21

True/False

For a company using the direct method, both the operating activities and investing activities will report the same net amounts provided or used as the indirect method, but the amount reported under financing activities will be different.

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Definitions:

Cost-Benefit Principle

An economic principle that compares the cost of an action to its benefits. The action is considered favorable if the benefits outweigh the costs.

Collusion

An agreement, usually secretive, between two or more parties to limit open competition by deceiving or defrauding others of their legal rights, or to obtain an objective forbidden by law, typically involving fraud or gaining an unfair market advantage.

Establishing Responsibilities

A principle of internal control that aims to clearly define roles and duties within an organization to ensure accountability and efficient operations.

Internal Control System

A process employed by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.