The Indirect Method of Preparing the Statement of Cash Flows

question 43

Multiple Choice

The indirect method of preparing the statement of cash flows ________.

• A)is preferred by business over the direct method
• B)provides greater clarity for users than the direct method
• C)reports a greater amount of cash than the direct method
• D)starts by converting net income into an accrual-based number

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Definitions:

Stacked Column Chart

A graphical representation using vertical bars divided into categories or segments, showing cumulative effect of multiple items.

Bar Chart

A graphical display of data using bars of different heights or lengths to compare various categories.

Scatter Chart

A type of graph used in statistics to display values for two variables for a set of data, showing the relationship between them.