Which of the Following Is Not True of the Direct

question 32

Multiple Choice

Which of the following is not true of the direct method of preparing a statement of cash flows?

• A)it gives the user a sense of the magnitude of gross dollars flowing in and out of the company.
• B)it has the same cash flows from investing and financing activities as the indirect method.
• C)it has a different net cash inflow (outflow)from operating activities than the indirect method.
• D)it reports the same net increase or decrease in cash as the indirect method.

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Definitions:

Behavioral Economics

An area within economics that investigates the influence of emotional, psychological, cognitive, social, and cultural elements on the economic decision-making of both individuals and institutions.

Tax Burden

The financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.

Economically Rational

Decision-making based on the principle of maximizing benefits while minimizing costs and resources.

Myopia

Refers to the difficulty human beings have with conceptualizing the more distant future. Leads to decisions that overly favor present and near-term options at the expense of more distant future possibilities.