The Direct Method for the Preparation of the Operating Activities

question 86

Multiple Choice

The direct method for the preparation of the operating activities section of the statement of cash flows:

• A) Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
• B) Separately lists each major item of operating cash receipts.
• C) Separately lists each major item of operating cash payments.
• D) Separately lists each major item of operating cash receipts and cash payments.
• E) All of these answers are correct.

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Definitions:

Environmental Preservation

Actions and policies aimed at protecting the natural environment from degradation and pollution to ensure its health and sustainability for future generations.

Derived Tax Revenue

Income obtained by government authorities through taxation that is influenced or generated from specific business activities or transactions.

FICA

The Federal Insurance Contributions Act, a U.S. law requiring a deduction from paychecks to fund Social Security and Medicare.

Property Taxes

Taxes imposed on property owners by local governments, based on the assessed value of their property, including lands and buildings.