The Indirect and Direct Methods of Preparing the Statement of Cash

question 60

Multiple Choice

The indirect and direct methods of preparing the statement of cash flows are identical except for the

• A) significant noncash activity section.
• B) operating activities section.
• C) investing activities section.
• D) financing activities section.

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Definitions:

Statement of Owner's Equity

A financial statement that outlines the changes in the equity of a company or individual over a specific period, detailing contributions, withdrawals, and the overall profit or loss.

End-of-period Spreadsheet

A tool used in accounting to compile all account balances and adjustments at the end of a period in order to prepare financial statements.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made in the previous period.

General Journal

A comprehensive journal that records all types of accounting transactions, without limitation to specific categories.