Which of the Following Statements About the Statement of Cash

question 53

Multiple Choice

Which of the following statements about the statement of cash flows is FALSE?

• A) The indirect method and the direct method will produce the same amount of cash flow.
• B) The indirect method begins with net income and adjusts to calculate operating cash flows.
• C) Both the direct and indirect methods include 3 types of cash flows.
• D) The operating activities section of both the direct and the indirect method are the same.

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Definitions:

General Journal Entry

An accounting record where transactions are initially recorded, detailing the accounts that are affected and the amounts, before the details are posted to the appropriate ledgers.

Discount Period

A specified time frame during which a discount is offered or can be taken advantage of.

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including the repayment period, discount for early payment, and the due date.

Invoice Price

The amount that appears on an invoice as the cost of buying or procuring a product or service.