Which Method of Preparing the Statement of Cash Flows Reconciles

question 42

Multiple Choice

Which method of preparing the statement of cash flows reconciles net income to cash flows from operating activities?

• A)Direct method
• B)Reconciliation method
• C)Equilibrium method
• D)Indirect method

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Definitions:

Economic Efficiency

The optimal allocation of resources to maximize the production of goods and services. Efficiency is achieved when no additional output can be gained without increasing the amount of inputs.

Collective Action Problem

A situation where individuals in a group fail to achieve a common or collective goal because they prioritize their personal interests.

Logrolling Behavior

A practice in politics where individuals or parties exchange favors for mutual benefit, often seen in legislative voting processes.

Inefficient Policies

Government or organizational policies that do not achieve the intended outcomes effectively or result in wasteful use of resources.