Which of the Following Is a Method for Reporting Cash

question 111

Multiple Choice

Which of the following is a method for reporting cash flows from operating activities that begins with net income and reconciles to cash flows from operating activities?

• A) cash-basis method
• B) direct method
• C) accrual method
• D) indirect method

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Definitions:

Management

The process of directing, controlling, and organizing resources in an organization towards achieving its goals.

Inventoriable Costs

Costs that are initially recorded as inventory on the balance sheet and recognized as cost of goods sold only when the inventory is sold.

Freight Charges

Costs associated with transporting goods from one location to another, often incurred by the seller to deliver goods to a customer.

Purchase Returns

Goods returned by the buyer to the seller, usually due to defects or otherwise not meeting expectations, resulting in a refund or credit.