When a Company Uses the Direct Method to Determine the Cash

question 5

Multiple Choice

When a company uses the direct method to determine the cash flows from operating activities,cash flows from operating activities will:

• A)be identical to the amount reported using the indirect method.
• B)be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
• C)always be larger than the amount reported using the indirect method.
• D)be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect method.

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Definitions:

Operating System

The software that manages a computer's hardware and software resources, providing common services for computer programs.

ROM

Read-Only Memory, a type of non-volatile storage that is primarily used to store firmware or application software in electronic devices.

RAM

Short for Random Access Memory, a type of computer memory that can be accessed randomly and is used for storing the working data and machine code currently being used.

FORTRAN

A high-level programming language used primarily for numerical and scientific computing, known for its efficiency in the areas of complex mathematical calculations.