Which of the Following Statements Concerning the Cash Flow Statement

question 18

Multiple Choice

Which of the following statements concerning the cash flow statement is true?

• A) The cash flow statement is usually more accurate when using the indirect method.
• B) A cash flow statement can be prepared using the direct or indirect method.
• C) The cash flow statement reports earnings per share.
• D) The cash flow statement is an optional financial statement for external reporting purposes.

---

Definitions:

Bottom Quintile

The lowest fifth or 20% segment of the population in a statistical distribution, often used in reference to income levels.

Income

Earnings received by an individual or business for their labor, investments, or through the sale of goods or services.

Lorenz Curve

Data plotted to show the percentage of income enjoyed by each percentage of households, ranked according to their income.

Perfect Income Equality

A theoretical economic condition where all individuals or households earn exactly the same income, leading to absolute equity in income distribution.