In Developing the Cash Flows from Operating Activities, Most Companies

question 66

Multiple Choice

In developing the cash flows from operating activities, most companies in Canada prefer to

• A) use the direct method.
• B) use the indirect method.
• C) present both the indirect and direct methods in their financial reports.
• D) prepare the operating activities section on the accrual basis.

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Definitions:

Component Commonality

The strategy of using the same parts or components in multiple products or models to reduce costs and simplify production.

Information System

An organized system for the collection, organization, storage, and communication of information; it typically involves people, technology, and processes.

Information Centralization

The practice of gathering and managing all relevant information within a single, centralized database or system to improve accessibility and decision-making.

Current Inventory

The existing stock of goods held by a business meant for sale or production.