Which of the Following Observations Concerning the Comparisons Between the Direct

question 13

Multiple Choice

Which of the following observations concerning the comparisons between the direct and indirect approaches of presenting a cash flow statement is true?

• A) The final number of cash flows from operating activities is different under the two approaches.
• B) The direct approach provides a clearer picture of cash flows related to operations.
• C) Authoritative bodies have generally expressed a preference for the indirect method.
• D) A separate reconciliation of operating cash flows and net income is required under the indirect approach.

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Definitions:

Non-assignable

A characteristic of a contract or right indicating that it cannot be transferred or delegated to another party without the consent of the original party or parties.

Contract Rights

Contract rights refer to the entitlements and obligations that are legally binding between parties as stipulated in a contract.

Revocability

The ability to nullify, cancel, or repeal an agreement or contract.

Assignments

The transfer of rights or property from one party to another, often used in the context of contracts or legal agreements.