The Advantages of the Direct Method Include All of the Following

question 193

Multiple Choice

The advantages of the direct method include all of the following except:

• A)it allows for more detailed analysis of operating cash flows.
• B)it provides more information than the indirect method to relate cash inflows and outflows.
• C)it allows for more reliable prediction of future cash flows.
• D)comparisons between companies are facilitated since most U.S.companies use the direct method.

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Definitions:

Financial Analysts

Professionals who evaluate investments, financial data, and economic trends to help make investment decisions or manage financial portfolios.

Currency Values

The worth of one country's currency in terms of another's, influenced by economic conditions and political stability.

Currency Cross Rate

The exchange rate between two currencies, calculated based on their common exchange rates with a third currency, usually the US dollar, without needing direct exchange between the two currencies.

Exchange Rate

The price at which one currency can be exchanged for another currency.