The Direct Method of Reporting

question 140

Multiple Choice

The direct method of reporting

• A)is preferred by U.S.GAAP.
• B)shows a reconciliation between net income and cash flow from operations either at the bottom of the statement of cash flows or in a separate note.
• C)reports the amounts of cash received from customers less cash disbursed to various suppliers, employees, lenders for interest payments, and taxing authorities.
• D)includes all of the above.
• E)includes none of the above.

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Definitions:

Top Quintile

The highest fifth of a population in income or wealth distribution, representing those with the greatest share of income or wealth.

Income

Money received, especially on a regular basis, for work, through investments, or from business activities, used to fund day-to-day expenditures or save for the future.

Bottom Quintile

The lowest fifth or 20% segment of the population in a statistical distribution, often used in reference to income levels.

Income

Earnings received by an individual or business for their labor, investments, or through the sale of goods or services.