When the Operating Activities Section of the Statement of Cash

question 77

Multiple Choice

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

• A)A reconciliation to the statement of cash flows under the indirect method.
• B)A reconciliation of net income to net cash provided or used by operating activities.
• C)Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities.
• D)The income statement to be prepared under the cash basis of accounting.
• E)Noncash investing and financing activities must be included in the statement of cash flows.

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Definitions:

Provide Services

The act of performing tasks or duties for customers or clients.

Quality Product

A good or service that meets or exceeds customer expectations in terms of performance, durability, and satisfaction.

Lower Cost Methods

Strategies or techniques adopted by businesses to reduce production expenses and improve efficiency, enhancing profitability.

Industrial Structure

The organization of industries within an economy, characterized by aspects such as market competition and the allocation of resources.