Which of the Following Statements About Preparation of the Statement

question 124

Multiple Choice

Which of the following statements about preparation of the statement of cash flows is correct?

• A)GAAP allows the indirect method only.
• B)GAAP allows the direct method only.
• C)GAAP allows either the indirect or direct method.
• D)Although GAAP allows either method for the preparation of the operating activities section of the statement of cash flows,the indirect method must be used to prepare the investing activities section of the statement of cash flows.

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Definitions:

Marginal Product

Describes the additional output that is produced by using one more unit of a factor of production, holding all other factors constant.

Marginal Cost

The supplementary cost that arises when one additional unit of a product or service is produced.

Marginal

Term used to describe the effects of a change in the current situation. For example, a producer’s marginal cost is the cost of producing an additional unit of a product, given the producer’s current facility and production rate.