Which of the Following Statements Is True of the Direct

question 9

Multiple Choice

Which of the following statements is true of the direct and indirect method of preparing the statement of cash flows?

• A)The indirect method and the direct method will produce a different amount of net cash flow from investing activities.
• B)The indirect method begins with Net Income and adjusts it to net operating cash flows.
• C)The direct and indirect methods include different types of cash flows in the investing activities section.
• D)The indirect method includes all non-cash activities, whereas the direct method includes only the cash activities.

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Definitions:

Tax Increase

A rise in the amount of money that individuals or corporations must pay to the government based on earnings or purchases.

Federal Budget Deficit

The shortfall that occurs when the government's expenditures exceed its revenues in a fiscal year.

Economic Growth

An increase in a country's capacity to produce goods and services, reflected by an upward trend in national income, employment, and GDP.

Stock Markets

Platforms where shares of publicly traded companies are bought and sold, enabling businesses to raise capital from investors, and providing investors opportunities to earn returns on their investments through dividends and stock value appreciation.