The Direct Method of Preparing the Statement of Cash Flows

question 54

Multiple Choice

The direct method of preparing the statement of cash flows is preferred primarily because of the way it reports:

• A)investing activities.
• B)financing activities.
• C)operating activities.
• D)noncash activities.

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Definitions:

AASB 120

An Australian accounting standard regarding accounting for government grants and disclosure of government assistance.

IAS 20

A regulation named "Accounting for Government Grants and Disclosure of Government Assistance" under International Accounting Standards.

Government Grant

Financial assistance provided by the government to entities, usually in the form of cash or tax breaks, with specific conditions for use.

Performance Obligation

A commitment in a contract to transfer a distinct good or service to a customer, which is a fundamental concept in revenue recognition.