Which of the Following Statements Regarding the Direct and Indirect

question 95

Multiple Choice

Which of the following statements regarding the direct and indirect methods of reporting cash flow from operating activities is false?

• A)Although both methods result in the same net increase or decrease in cash for the year,net cash flow from operating activities will be different under the two methods.
• B)The direct method shows the specific cash inflows and outflows constituting the operating activities of the business.
• C)Under the indirect method,the computation of net cash flow from operating activities begins with net income as shown in the income statement.
• D)The FASB permits both the direct and the indirect methods,but has expressed a preference for the direct method.

---

Definitions:

Pollution Emissions

The release of pollutants, harmful chemicals, or substances into the environment, typically as a byproduct of industrial activity or transportation.

Total Pollution Emissions

Total Pollution Emissions refer to the sum of all harmful pollutants released into the environment by human activities, including industrial processes, vehicles, and agriculture.

Marginal Benefits

The additional satisfaction or utility gained from consuming or producing one more unit of a good or service.

Pollution Tax

A levy imposed on activities that emit pollutants, intended to internalize the environmental costs of those emissions and encourage pollution reduction.