The Direct Method of Preparing the Operating Section of the Statement

question 31

Multiple Choice

The direct method of preparing the operating section of the statement of cash flows:

• A)is the most popular method used.
• B)reports all cash receipts and cash payments from operating activities.
• C)reconciles net income to net cash provided by operating activities.
• D)reports different amounts for investing and financing activities than the direct method.

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Definitions:

RRSP

A Registered Retirement Savings Plan, a Canadian investment account for holding savings and investment assets, with certain tax advantages.

Compounded Annually

Interest calculated once a year on the initial principal and the accumulated interest of previous periods of a deposit or loan.

Deferred Annuity

An insurance product that delays income payments until the investor elects to receive them, which can be many years after the initial investment.

Ordinary Annuity

A series of equal payments made at regular intervals, with the interest compounded at the end of each period.