The Statement of Cash Flows Presentation Method That Separates Gross

question 28

Multiple Choice

The Statement of Cash Flows presentation method that separates gross cash inflows from cash outflows is known as the:

• A) equity method;
• B) direct method;
• C) set-off method;
• D) net method.

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Definitions:

Work in Process Inventory

Represents the cost of unfinished goods in the production process, including labor, materials, and overhead.

Service Department Costs

The expenses incurred by support departments within a company that do not directly contribute to profit but provide necessary services.

Operating Departments

Sections or divisions within a business that are responsible for carrying out its core operations, as opposed to support or administrative departments.

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are listed directly.