When the Operating Activities Section of the Statement of Cash

question 8

Multiple Choice

When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires:

• A) The income statement to be prepared under the cash basis of accounting.
• B) The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method.
• C) Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities.
• D) A reconciliation of net income to net cash provided or used by operating activities.
• E) Noncash investing and financing activities be included in the statement of cash flows.

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Definitions:

Constancy

The quality of being unchanging or steadfast over a period of time.

Social Identity

An individual's sense of who they are based on their group memberships and the value and emotional significance attached to those memberships.

Personal Identity

An individual's conception and expression of their own self and personality, including aspects of their life that make them unique.

Perceptual Defence

A psychological mechanism that screens and excludes from consciousness distressing or threatening information.