In Preparing a Statement of Cash Flows (Indirect Method),cash Flows

question 56

Multiple Choice

In preparing a statement of cash flows (indirect method) ,cash flows from operating activities

• A) is calculated as the difference between revenues and expenses plus the beginning cash balance.
• B) is always equal to the sum of cash flows from investing activities and cash flows from financing activities.
• C) can be calculated by appropriately adding to or deducting from net income those items in the income statement that affect cash and accruals for current assets and current liabilities.
• D) can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.

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Definitions:

Beneficiary

An individual or entity entitled to receive benefits or assets from a will, trust, insurance policy, or other legal arrangement.

Stale Check

A check that is presented for payment after a certain period (typically six months) from its issue date, leading to its potential refusal by the bank.

Settlement

An agreement reached between parties in a dispute to amicably resolve their differences, often involving a compromise and the cessation of further legal action.

Provisional

Not final.