A Company Uses the Direct Method of Preparing the Statement

question 5

Multiple Choice

A company uses the direct method of preparing the statement of cash flows. Current year depreciation expense can be found on the

• A) balance sheet and income statement.
• B) income statement and statement of cash flows.
• C) statement of cash flows and balance sheet.
• D) income statement only.
• E) statement of cash flows only.

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Definitions:

Accounting Transactions

Economic events that require recording in the financial statements because they affect the assets, liabilities, or equity of a company.

Accounting Records

Documentation and books that keep track of the financial transactions of a business or individual, forming the basis for its financial statements.

Asset

Resources controlled by a business from which future economic benefits are expected to flow to the business, including both physical items and intangible properties.