The Direct Method of Preparing the Statement of Cash Flows

question 102

Multiple Choice

The direct method of preparing the statement of cash flows:

• A)has an identical operating activities section as the indirect method.
• B)is used by a vast majority of companies.
• C)is preferred by FASB.
• D)is much easier for companies to compute.

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Definitions:

Administrative Agency

A government body responsible for the oversight and implementation of specific regulations and statutes within its area of authority.

Substantial Evidence Test

A legal principle that a decision must be supported by sufficient evidence that a reasonable person could accept as adequate to support a conclusion.

Proof Beyond A Reasonable Doubt

The highest standard of proof required in criminal trials, ensuring that there is no reasonable alternative to the conclusion that the defendant is guilty.

Rational Basis

A standard of judicial review that requires laws or actions to be reasonably related to a legitimate governmental interest.