Under the Direct Method of Preparing the Financing Section of the Statement

question 3

Multiple Choice

Under the direct method of preparing the financing section of the statement of cash flows, net cash provided by financing activities is $388,000. If the indirect method of preparing the financing section of the statement of cash flows was used:

• A) cash provided by financing activities would be less than $388,000.
• B) cash provided by financing activities would be more than $388,000.
• C) cash provided by financing activities would be the same, $388,000.
• D) cash provided by operating activities would equal $388,000.

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Definitions:

Positively Sloped

Describes a line or curve on a graph that moves upward as it goes from left to right, indicating a positive relationship between two variables.

Negatively Sloped

Refers to a downward inclination of a line or curve on a graph, indicating an inverse relationship between two variables.

Total Surplus

The total net benefit to society from the production and consumption of a good, equal to the sum of consumer surplus and producer surplus.

Consumer Surplus

The deviation between the full cost that consumers are willing and are financially suitable to pay for a product or service, and the cost they ultimately pay.