When Preparing a Statement of Cash Flows Using the Direct

question 19

Multiple Choice

When preparing a statement of cash flows using the direct method,amortization of a patent is

• A) shown as an increase in cash flows from operating activities.
• B) shown as a reduction in cash flows from operating activities.
• C) included with supplemental disclosures of noncash transactions.
• D) not reported in the statement of cash flows or related disclosures.

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Definitions:

Instructions

Directives or commands that are followed to achieve a particular end, often detailed steps on how to complete a task or operate something.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, typically denoted by alpha.

Rule of Five

A statistical rule of thumb asserting that normal approximation can be used if an expected frequency is 5 or more in all categories of a binomial distribution.

Chi-squared Goodness-of-fit Test

A statistical test to determine if observed data deviates significantly from the expected distribution.