The Direct Method of Preparing the Statement of Cash Flows

question 23

Multiple Choice

The direct method of preparing the statement of cash flows is preferred by the Financial Accounting Standards Board primarily because of the way it reports:

• A)operating activities.
• B)investing activities.
• C)financing activities.
• D)noncash activities.

Apply heuristics to find solutions to complex problems without guaranteeing optimality.

Distinguish between data types and their roles within a spreadsheet model.

Understand the fundamental components of the FASB conceptual framework.

Identify and describe the common forms of business ownership and their characteristics.

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Definitions:

Lease Payments

Regular payments made by a lessee to a lessor for the use of a leased asset over an agreed period.

Capital Cost

The one-time expenditure on physical assets such as buildings, machinery, and equipment, not to be confused with operational or day-to-day expenses.

Ordinary Annuity

An annuity in which the payments are made at the end of each period, such as monthly or annually.

Financial Calculator

A tool used to perform financial functions and calculations, including interest rates, loan payments, investment values, and more.