The Indirect Method of Preparing the Operating Section of the Statement

question 51

Multiple Choice

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

• A)produces the same figure for cash from operating method as the direct method.
• B)uses different computations than the direct method.
• C)does not affect investing or financing activities.
• D)is all of the above.

---

Definitions:

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain timeframe.

Incentive System

An incentive system is a business tool that uses rewards and penalties to motivate employees to achieve specific objectives and improve performance.

Employment Stability

The assurance of consistent work and income for employees, contributing to job satisfaction and loyalty.

Follow Demand

Adapting production and inventory levels to meet current demand trends to minimize surplus and shortages.