The Indirect Method for Preparation of the Operating Activities Section

question 32

Multiple Choice

The indirect method for preparation of the operating activities section of the statement of cash flows involves adjustments:

• A) For income statement items involving operating activities that do not affect cash inflows or outflows.
• B) For income statement items involving operating activities that do not affect cash inflows or outflows and for changes in noncash current assets and current liabilities.
• C) To eliminate gains and losses resulting from investing and financing activities.
• D) For changes in noncash current assets and current liabilities.
• E) All of these answers are correct.

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Definitions:

Work Unit

A functional group or department within an organization, consisting of individuals working together to achieve shared goals.

Coordination Of Activities

The process of organizing and aligning tasks and resources to ensure efficient operation and goal attainment within a group or organization.

Efficient Organization

An organization that maximizes outputs with minimal wasted effort or expense, often through streamlined processes, clear communication, and effective resource management.

Representing Category

Acting as an example or embodiment of a broader group or classification.