Regarding the Direct and Indirect Methods of Preparing the Statement

question 41

Multiple Choice

Regarding the direct and indirect methods of preparing the statement of cash flows, which of the following statements is true?

• A) The indirect method and the direct method will produce a different amount of net cash provided by investing activities.
• B) The indirect method starts with net income and adjusts it to net cash provided by (used for) operating activities.
• C) The direct and indirect methods include different types of cash flows in the investing activities section.
• D) The indirect method includes all non-cash activities, whereas the direct method includes only the cash activities.

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Definitions:

Logistical Services

Services that facilitate the movement, storage, and processing of goods throughout the supply chain, including transportation, warehousing, and customs brokerage.

Customer Service

The help and service offered by a business to individuals who purchase or utilize its products or services.

Logistics Costs

The total expenses incurred in moving goods from their point of origin to the final consumer, including transportation, warehousing, and handling fees.

Inventory Costs

The costs associated with storing and handling inventory, including warehousing, insurance, and transportation, among others.