When a Company Uses the Direct Method to Determine the Net

question 91

Multiple Choice

When a company uses the direct method to determine the net cash flow from operating activities,cash flows from operating activities will:

• A)be identical to the amount reported using the indirect method.
• B)be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
• C)always be larger than the amount reported using the indirect method.
• D)be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect method.

Understand the economic implications of external costs and benefits and how they relate to market efficiency and failure.

Gain insights into the economic models and their use in simplifying and understanding real-world economic phenomena.

Recognize the effects of economic policies and systems on social welfare and income distribution.

Understand the components and computation of beginning and ending capital balances in partnership accounts.

---

Definitions:

Debt Securities

Financial instruments representing money borrowed that must be repaid, with terms that define the amount, interest rate, and maturity date.

Bonds

Fixed income investments in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.

Convertible Bond

A type of bond that can be converted into a predetermined number of shares of the issuing company's stock.

Subscription Agreements

Legal agreements for the purchase of shares in a company, typically used in private placements, detailing the terms and conditions of the investment.