Current GAAP Permits Two Methods of Calculating and Reporting a Company's

question 29

Essay

Current GAAP permits two methods of calculating and reporting a company's net cash flow from operating activities on its statement of cash flows.
Required:
Identify the two methods.Which method does the FASB prefer? Which method do most companies use and why?

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Definitions:

Judicial Restraint

A philosophy where judges play a minimal policymaking role, interpreting the Constitution and laws strictly and deferring to the legislative and executive branches.

Certiorari Pool

A system used by the Supreme Court justices to review petitions for writs of certiorari, where law clerks screen cases and recommend whether they should be heard.

Supreme Court Law Clerks

Highly qualified young attorneys who assist Supreme Court Justices by conducting legal research, drafting opinions, and performing various clerical tasks.

Supreme Court Cases

Legal disputes that are presented to and decided by the Supreme Court of the United States.