The Indirect Method for the Preparation of the Operating Activities

question 24

Multiple Choice

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

• A) Separately lists each major item of operating cash payments.
• B) Is required if the company is a merchandiser.
• C) Must not be used in all circumstances.
• D) Separately lists each major item of operating cash receipts.
• E) Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.

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Definitions:

Psychological Reasoning

Psychological reasoning involves the process of using logical, rational thinking and mental activities to understand human behavior and cognitive processes.

Moral Intuitions

Immediate, gut-level feelings that guide judgments of right and wrong without conscious reasoning.

Automatic Unconscious Thinking

Mental processes that occur without conscious awareness or effort, often guiding behaviors and decisions with minimal awareness.

Concrete Operations

A stage in cognitive development where children gain the ability to think logically about concrete events and understand the concepts of conservation and reversibility.