Under the Direct Method of Preparing a Statement of Cash

question 98

True/False

Under the direct method of preparing a Statement of Cash Flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

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Definitions:

Unadjusted Trial Balance

A preliminary report that lists all accounts and their balances before any adjustments are made for accruals, deferrals, and errors.

Proper Order

A systematic arrangement or sequence that things follow which conforms to a set of rules or a standard procedure.

Accounts

Records within financial accounting that track financial transactions of a specific type, such as assets, liabilities, equity, expenses, and revenues.

Trial Balance Totals

The sum of all debit and credit balances in a trial balance, used to verify that the total debits equal total credits in double-entry bookkeeping.