Which of the Following Statements About the Cash Flow Statement

question 2

Multiple Choice

Which of the following statements about the cash flow statement is TRUE?

• A)The operating activities section of both the direct and the indirect method is the same.
• B)The indirect method and the direct method will both show the same end results.
• C)The direct method begins with profit and adjusts to calculate operating cash flows.
• D)The indirect method shows three types of cash flows but the direct method does not.

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Definitions:

Producer Surplus

The discrepancy between the price at which producers are prepared to sell a product and the actual price they obtain.

Consumer Surplus

A mismatch between the price consumers feel prepared to pay for a good or service, and the actual outlay.

Competitive Price

A price that is in line with or slightly below the market average, aiming to attract customers in a competitive environment.

Total Surplus

is the sum of consumer surplus and producer surplus, representing the overall economic benefit to society from trade or market activity.