Two Methods Are Available to Prepare the Operating Activities Section

question 152

Multiple Choice

Two methods are available to prepare the Operating Activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

• A)If a company uses the indirect method,it must separately disclose the cash payments made for interest and income taxes.
• B)If a company uses the direct method,it must present a separate schedule that reconciles net income to net cash from operating activities.
• C)Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations.
• D)The FASB prefers the direct method,while most companies use the indirect method in practice.

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Definitions:

NaCl Concentrations

The measure of the amount of sodium chloride, common table salt, dissolved in a given volume of solution, affecting cellular processes and fluid balance.

Mesangial Cells

Specialized cells in the kidneys that help regulate blood flow through the glomeruli and support glomerular capillaries.

Renal Fascia

A layer of connective tissue that encloses the kidneys and adrenal glands, providing protective support.

Perinephric Fat

A layer of fatty tissue surrounding the kidney that provides cushioning and insulation.