The Direct Method of Preparing the Operating Activities Section of the Statement

question 2

True/False

The direct method of preparing the operating activities section of the statement of cash flows reports major classes of gross cash receipts and gross cash payments.

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Definitions:

Balance Sheet

A report detailing a business's assets, liabilities, and owners' equity at a given moment.

Income Statement

A financial document that reports a company's revenues, expenses, and profits over a specific period.

Statement Of Cash Flows

Reports the impact of a firm’s operating, investing, and financing activities on cash flows over an accounting period.

Net Before-Tax Operating Income

Earnings generated from a company's core business operations before taxes and non-operating costs are deducted.