Analysts Prefer the Indirect Method for the Preparation of the Cash

question 96

Multiple Choice

Analysts prefer the indirect method for the preparation of the cash flow statement because the size and direction of the items reconciling net income to net cash flow from operating activities provide a yardstick for measuring the

• A)current ratio.
• B)return on assets.
• C)quality of earnings.
• D)rate of dividends.

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Definitions:

Epinephrine

A hormone also known as adrenaline, secreted by the adrenal glands, increasing heart rate and blood pressure during stress.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, often involving heightened physical activity and alertness.

Leptin

A hormone produced by adipose cells that helps to regulate energy balance by inhibiting hunger, thereby helping to regulate body weight.

Two-Factor Theory

A theory that asserts emotion arises from physiological arousal followed by a cognitive label of that arousal, proposed by Stanley Schachter and Jerome E. Singer.