The Indirect Method for the Preparation of the Operating Activities

question 52

Multiple Choice

The indirect method for the preparation of the operating activities section of the statement of cash flows:

• A)Separately lists each major item of operating cash receipts.
• B)Separately lists each major item of operating cash payments.
• C)Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
• D)Is required if the company is a merchandiser.
• E)Must not be used in all circumstances.

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Definitions:

Stock Variable

A quantity measured at a specific point in time, representing a snapshot of a certain value, such as the amount of money in a savings account.

Stagflation

A situation in an economy where there is a combination of stagnant economic growth, high unemployment, and high inflation.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period.

Keynesian Policies

Economic strategies based on the ideas of John Maynard Keynes that advocate for government intervention to manage demand and stabilize the economy.