The Direct Method for Computing and Reporting Net Cash Flows

question 131

True/False

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

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Definitions:

Self-Interest

An individual’s personal gain; the drivers of economic behavior assuming that individuals act in pursuit of their own best interests.

Free-Market System

An economic system based on supply and demand with little or no government control.

Quantity Adjustments

Changes made in the quantity of goods produced or procured in response to shifts in demand or supply.

Laissez-Faire Economy

An economic system where private parties are free from government intervention, such as regulations, privileges, tariffs, and subsidies.