When a Statement of Cash Flows Is Prepared Using the Indirect

question 38

Multiple Choice

When a statement of cash flows is prepared using the indirect method,

• A)net income is the starting point in determining cash flows from operations.
• B)cash paid for dividends is not included.
• C)the increase in cash is different than when the direct method is used.
• D)the amount of cash collected from customers is calculated.

---

Definitions:

Fair Bet

A betting proposition where the expected gains or losses are theoretically equal, implying no advantage to either side.

Zero Sum Game

A situation in-game theory where one participant's gain or loss is exactly balanced by the losses or gains of the other participants.

Utility

The measure of satisfaction or value that an individual derives from consuming goods and services.

Risk-neutral

A characteristic of individuals or entities who are indifferent to risk when making investment decisions, focusing solely on the expected returns.