Using the Direct Method of Preparing the Statement of Cash

question 45

Multiple Choice

Using the direct method of preparing the statement of cash flows, to determine the cash effects of operating activities, which of the following must be adjusted?

• A)Dividends declared
• B)Reported revenues and expenses
• C)Long-term assets and liabilities from the balance sheet
• D)Equity as reported in the balance sheet

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Definitions:

Logistics

The management of the flow of goods, services, and information between the point of origin and the point of consumption to meet customer or corporate requirements.

Taxes

Mandatory financial charges or levies imposed by a government on individuals or organizations to fund public expenditures.

Total Profits

A rephrased definition would be: The cumulative financial gain a company achieves after deducting all operational, production, and overhead costs from its revenue.

Demand

The total quantity of a good or service that consumers are willing and able to purchase at a given price level in a given period.