When the Direct Method Is Used to Determine Operating Cash

question 71

Multiple Choice

When the direct method is used to determine operating cash flows,how is the sale of long-term investments for cash reported on the statement of cash flows?

• A) as an operating activity
• B) as an investing activity
• C) as a financing activity
• D) as a noncash investing and financing activity

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Definitions:

Asset's Value

The monetary worth assigned to an asset, based on factors like market value, cost, and depreciation.

Benefit Period

The duration during which benefits, such as those from an insurance policy or investment, are paid out.

Depreciation Expense

The distribution of a physical asset's expense over its lifespan, mirroring its decrease in worth as time progresses.

Estimated Depreciation

A projected amount of depreciation expense for an asset, reflecting its anticipated decline in value over a specified period due to wear and tear or obsolescence.