The First Section of the Statement of Cash Flows Derives

question 116

Multiple Choice

The first section of the statement of cash flows derives cash flow from _____ activities.The _____ method reports the amounts of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.

• A)operating; direct
• B)operating; indirect
• C)investing; direct
• D)investing; indirect
• E)financing: direct

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Definitions:

Tax Advantage

Financial benefits that apply to certain accounts or investments which are provided to encourage specific behaviors, such as saving for retirement. These advantages can lead to a reduction in tax liability.

Personal Liabilities

Debts or obligations that an individual is responsible for, as opposed to those belonging to businesses or governmental entities.

Limited Partners

Investors in a partnership who have limited liability to the extent of their investment in the partnership. They do not partake in the day-to-day management of the business.

Limited Liability

A legal structure that limits the personal financial risk for shareholders of a company to the amount they invested in the company.