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:

Small Firms

Businesses characterized by a limited number of employees, often viewed as more agile but with lesser resources compared to larger corporations.

Low-context Cultures

Cultures that rely heavily on explicit communication and direct expression of thoughts and ideas.

High-context Cultures

Cultures in which communication relies heavily on contextual elements like body language, status, and tone of voice, rather than explicit words.

Acquaintances

People known by someone, but not considered close friends; typically relationships are of a less intimate nature.