In Preparing a Statement of Cash Flows, the Method Involves

question 19

Multiple Choice

In preparing a statement of cash flows, the method involves adjusting net income to reconcile it to net cash flows from operating activities.

• A)direct
• B)indirect
• C)accrual
• D)none of the answers is correct

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Definitions:

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Total Sales

The aggregate revenue a company generates from the sale of goods or services before any expenses are subtracted.

Current Ratio

Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.

Accounts Receivable

Funds that are to be paid to a business by its customers for the provision of goods or services that have already been delivered or used, but have not been paid for.