Regarding the Direct and Indirect Methods of Preparing the Statement

question 136

Multiple Choice

Regarding the direct and indirect methods of preparing the statement of cash flows,which of the following statements is TRUE?

• A) The indirect method and the direct method will produce a different amount of net cash provided by investing activities.
• B) The indirect method starts with net income and adjusts it to net cash provided by (used for) operating activities.
• C) The direct and indirect methods include different types of cash flows in the investing activities section.
• D) The indirect method includes all non-cash activities, whereas the direct method includes only the cash activities.

---

Definitions:

Evaluate

The process of calculating the value of an expression, equation, or function for given variables or numbers.

Calculator

An electronic or manual device used for calculating numbers, functions, and mathematical expressions.

Exponents

Exponents indicate how many times a number, the base, is multiplied by itself.

Rational Exponents

Exponents expressed as fractions, representing powers and roots of a base number, and allowing for more complex relationships in algebra.