The Only Part That Differs in a Statement of Cash

question 157

Multiple Choice

The only part that differs in a statement of cash flows prepared by the direct method from one prepared by the indirect method is the ________.

• A) financing activities section
• B) investing activities section
• C) operating activities section
• D) non-cash investing and financing activities section

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Definitions:

Short-Term Investments

Short-term investments are financial assets that are expected to be converted into cash within one year and are typically used by firms to manage surplus cash efficiently.

Current Receivables

Short-term financial assets that are due to be received within one year, typically from customers who owe the company money for goods or services provided.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

Quick Assets

Highly liquid assets that can be quickly converted into cash without losing value, often including cash, marketable securities, and accounts receivable.