The Direct Method for the Preparation of the Operating Activities

question 90

Multiple Choice

The direct method for the preparation of the operating activities section of the statement of cash flows:

• A) Separately lists each major item of operating cash receipts and cash payments.
• B) Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement.
• C) Reports an amount of cash flows from operations different from the amound determined using the indirect method.
• D) Is required if the company is a merchandiser.
• E) Is required by the FASB.

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Definitions:

Yield To Maturity

Yield to maturity represents the total return an investor would receive by holding a bond until it matures, including all interest payments and the repayment of principal.

Realized Compound Yield

The reflective measurement of the total returns on an investment, factoring in compounding interest or returns over a specified time frame.

Coupon Rate

The yearly rate of interest that the entity issuing a bond pays to the bondholders, represented as a percentage of the bond's principal value.

Yield To Maturity

The expected rate of return on a bond if held until its maturity date, reflecting both interest payments and any gain or loss if the bond was purchased at a discount or premium.