Which Method of Preparing the Operating Activities Section of a Statement

question 76

Multiple Choice

Which method of preparing the operating activities section of a statement of cash flows adjusts net income to remove the effects of deferrals and accruals for revenues and expenses?

• A) The direct method
• B) The indirect method
• C) Both the direct and indirect methods
• D) Neither the direct method nor the indirect method

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Definitions:

Shrimp Market

An economic market specifically for the trading and selling of shrimp, influenced by factors like supply, demand, seasonality, and aquaculture developments.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity.

Consumers

Individuals or households that purchase goods and services for personal use.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net benefit to society from the production and consumption of a good or service.