Which Method of Preparing the Operating Activities Section of the Statement

question 172

Multiple Choice

Which method of preparing the operating activities section of the statement of cash flows consists of a summary of each component of operating transactions that result in either a debit or a credit to cash?

• A)Direct method.
• B)Indirect method.
• C)Accrual method.
• D)Cash method.

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Definitions:

Equity Profit

The portion of net income attributable to the equity holders of a company, representing their share of the earnings.

Share Capital

The total amount of funds raised by a company through the issuance of shares to investors, representing ownership in the company.

Shareholders' Equity

It represents the net assets of a company, calculated as total assets minus total liabilities, and is the ownership interest of the shareholders.

Goodwill Element

The portion of the purchase price in a business combination that exceeds the fair value of the net identifiable assets of the acquired entity, representing intangible assets like brand reputation or customer relationships.