Which of the Following Methods Reports Literal Cash Flows Related

question 9

Multiple Choice

Which of the following methods reports literal cash flows related to income statement classifications?

• A)The indirect method
• B)The direct method
• C)Both a and b.
• D)None of the above

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Definitions:

Sales Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. In this context, it specifically refers to a tax on sales of goods and services.

Ordinary Repairs

Expenditures to maintain an asset in its normal operating condition without significantly extending its useful life or altering its capacity.

Double-declining-balance Method

An accelerated method of depreciation that counts as an expense twice the straight-line depreciation rate for the declining book value of the asset each year.

Straight-line Method

A method of depreciation that distributes a consistent depreciation expense for an asset throughout its lifetime.