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:

Market Price

The present cost at which a product or service is available for purchase or sale in the marketplace.

Net Marginal Revenue

The difference between the marginal revenue earned from selling an additional unit of a product or service and the marginal cost of producing that unit.

Wool Fabric

A textile material made from the natural fibers of sheep, known for its warmth, resilience, and ability to absorb moisture without feeling wet.

Marginal Cost

The upswing in total financial outlay required for the production of one more unit of a good or service.