Which of the Following Statements About the Reporting of Operating

question 131

Multiple Choice

Which of the following statements about the reporting of operating cash flows using the direct method is correct?

• A)Although most U.S.companies use the indirect method,the Financial Accounting Standards Board (FASB)prefers the direct method of accounting for cash flows from operating activities.
• B)The FASB prefers the indirect method of calculating cash flows from operating activities because it gives a more accurate calculation of cash provided by operating activities.
• C)The direct method results in a larger amount of cash flow from operating activities than does the indirect method.
• D)The direct and indirect methods use different presentations for cash flows from investing and financing activities.

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Definitions:

Min Function

A mathematical function used to determine the smallest value among a set of numbers or inputs.

Income

A measure of money received on a regular basis, either through employment, business, investments, or other sources.

Price of X

The specific cost or value associated with a particular item or commodity, denoted as "X."

Price of Y

The monetary cost or value assigned to a good or service, labeled as 'Y'.