The Direct Method for the Preparation of the Operating Activities

question 149

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 amount 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:

Round-Trip Ticket

A ticket that allows someone to travel to a destination and return to the original departure point, typically within a specified period.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits you could have received by taking an alternative action.

Monetary Cost

The amount of money expended to produce or acquire goods or services.

Opportunity Cost

The drawback of failing to select the next best possible choice during the decision-making process.