Which Statement Regarding the Statement of Cash Flows Is TRUE

question 63

Multiple Choice

Which statement regarding the statement of cash flows is TRUE?

• A)The indirect method is preferred by FASB and is used by most companies.
• B)The direct method is preferred by FASB; the indirect method is used by most companies.
• C)The direct method is preferred by FASB and is used by most companies.
• D)The indirect method is preferred by FASB; the direct method is used by most companies.

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Definitions:

Ability-to-pay Principle

A tax principle that suggests taxes should be levied according to an individual or entity's capacity to pay, reflecting their income or wealth.

Transfer Payments

Payments made by governments to individuals or other entities without the expectation of a direct return or the provision of goods or services, such as social security benefits or subsidies.

Income Distribution

The way in which a nation's total GDP is distributed amongst its population.

Quintiles

Statistical values that divide a set of data into five equal parts, often used in economic and social research to analyze distribution.