The Difference Between the Direct and Indirect Methods of Computing

question 125

Multiple Choice

The difference between the direct and indirect methods of computing the cash flow statement occurs in the:

• A) financing activities section.
• B) operating activities section.
• C) investing activities section.
• D) managing activities section.

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Definitions:

Accounts Receivable

Accounts receivable are amounts owed to a business by customers for goods or services delivered but not yet paid for.

Asset Section

The asset section of a balance sheet details a company's owned resources with economic value anticipated to provide a future benefit.

Wages Expense

The total amount of money paid to employees for work performed, reported on the income statement.

Clawback Provisions

Terms included in contracts that require an individual to return money previously earned, often used to reclaim bonuses or other compensation under certain conditions.