The Direct Method of Preparing the Statement of Cash Flows

question 23

Multiple Choice

The direct method of preparing the statement of cash flows is preferred by the Financial Accounting Standards Board primarily because of the way it reports:

• A)operating activities.
• B)investing activities.
• C)financing activities.
• D)noncash activities.

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Definitions:

Bailee

The person acquiring possession of personal property in a bailment.

Gratuitous Bailment

A situation where property is voluntarily transferred into another's custody without expectation of payment.

Stradivarius

A type of high-quality stringed instrument made by members of the Stradivari family, particularly renowned violins.

Bailor

The party in a bailment who temporarily transfers possession but not ownership of a property to another party, the bailee.