Which of the Following Statements Regarding Use of the Direct

question 59

Multiple Choice

Which of the following statements regarding use of the direct and indirect methods of determining cash flows from operating activities is incorrect?

• A)The indirect method starts with net income.
• B)The direct method calculates cash collected from customers.
• C)The majority of U.S.companies use the indirect method.
• D)The FASB recommends use of the indirect method.

---

Definitions:

Pet Supply Business

A commercial enterprise that sells products and supplies for pets.

Criminal Law Statute

Laws codified in statutes that define criminal offenses and prescribe punishments for such offenses.

Bureaucracy

A system of government or management involving multiple layers of administration, procedures, and rules.

Provincial And Federal Levels

Refers to the two distinct layers of government in countries with a federal system, where "provincial" pertains to subdivisions (states, provinces, etc.) and "federal" relates to the national government.