Which of the Following Statements Is True Regarding GAAP and Reporting

question 63

Multiple Choice

Which of the following statements is true regarding GAAP and reporting operating activities on the statement of cash flows?

• A) The direct method is required of large companies.
• B) GAAP expresses a preference for the indirect method.
• C) GAAP expresses a preference for the direct method.
• D) GAAP did not express a preference for either the direct or indirect method.

Analyze the impact of financing activities on a company's financial stability and growth.

Distinguish between investing and financing cash flows and their significance in financial analysis.

Recognize the importance of the separate entity assumption in financial reporting.

Understand the significance of the continuity assumption in preparing financial statements.

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Definitions:

Cell Mediated

Relating to the immune response that does not involve antibodies but rather the activation of white blood cells against pathogens.

Active Immunity

Immunity acquired through the immune system's response to a disease organism or vaccination, leading to the production of antibodies.

Antiseptic Hand Solution

A liquid substance used to eliminate or reduce pathogens on the skin, especially in the hands, to prevent contamination.

Effectiveness

The degree to which a procedure, treatment, or service produces a desired result or outcome under usual or real-world conditions.