Although You May Worry About Using the Indirect Strategy to Communicate

question 73

Multiple Choice

Although you may worry about using the indirect strategy to communicate bad news, one benefit it has is

• A) demonstrating your writing abilities.
• B) ensuring that your reasoning will be read while the receiver is still receptive.
• C) disguising the bad news.
• D) placing the bad news before the explanation.

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Definitions:

Indirect Method

A way of calculating cash flows from operating activities by starting with net income and adjusting it for changes in non-cash accounts.

Patent Amortization

The process of expensing the cost of a patent over its useful life, reflecting the consumption of the patent's value over time.

Depreciable Asset

A tangible asset that is subject to depreciation, reflecting its loss in value over time due to wear and tear, or obsolescence.

Indirect Method

A way of preparing a cash flow statement where net income is adjusted for non-cash transactions, deferrals, and accruals to calculate cash from operating activities.