Under the Direct Method of Reporting Operating Cash Flows, a Company

question 97

True/False

Under the direct method of reporting operating cash flows, a company computes the cash outflows for operating activities by adjusting the various expense accounts for changes in certain liability accounts and deferred revenues, and also eliminates certain "noncash" expenses or losses.

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Definitions:

Goodwill

The value attributed to a company's brand name, customer relationships, employee relations, and other intangible assets during an acquisition, over and above the tangible assets' value.

Voting Common Stock

Equity securities that give shareholders the right to vote on corporate matters.

Fair Value

The compensation for parting with an asset or the financial burden of settling a liability in an orderly market operation as of the measurement checkpoint.