Which of the Following Correctly Describes a Difference Between the Direct

question 166

Multiple Choice

Which of the following correctly describes a difference between the direct method and the indirect method of computing operating cash flow?

• A) The direct method is used when accounting records are kept on a cash basis; the indirect method is used when accounting records are maintained on an accrual basis.
• B) The direct method may be used only when a company maintains special journals for cash receipts and cash disbursements; the indirect method is used in all other situations.
• C) Both the direct and the indirect methods result in the same net cash flow from operating activities, but the format of this section of the statement of cash flows is different under the alternative methods.
• D) The direct method is used when all accounting records and bank statements are available; the indirect method is used when some accounting records or documents are missing or have been destroyed.

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Definitions:

Hemoglobin

A protein in red blood cells that carries oxygen from the lungs to the body's tissues and returns carbon dioxide from the tissues back to the lungs.

Sinuses

Air-filled spaces located within the bones of the face and skull, connected to the nasal cavities, which help humidify and filter air.

Erythrocyte

A vertebrate red blood cell; contains hemoglobin, which transports oxygen. Compare with leukocyte.

Biconcave Shape

Describes the geometry of objects, such as red blood cells, that are concave on both sides, aiding in flexibility and the area for gas exchange.