The Method of Reporting Cash Flows from Operating Activities Under

question 64

Multiple Choice

The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:

• A) direct method.
• B) indirect method.
• C) combination method.
• D) adjustment method.

---

Definitions:

Impairment Losses

Financial losses recognized when an asset's carrying value exceeds its recoverable amount.

GAAP

Generally Accepted Accounting Principles (GAAP) are a framework of accounting standards, procedures, and rules used by accountants to prepare financial statements in the United States.

Long-lived Assets

Assets that provide economic benefit for more than one accounting period, typically including property, plant, and equipment.

Demolition

The process of tearing down or destroying a building or structure, usually in order to make way for new construction.