The Indirect Method for the Preparation of the Operating Activities

question 52

Multiple Choice

The indirect method for the preparation of the operating activities section of the statement of cash flows:

• A)Separately lists each major item of operating cash receipts.
• B)Separately lists each major item of operating cash payments.
• C)Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
• D)Is required if the company is a merchandiser.
• E)Must not be used in all circumstances.

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Definitions:

Rituals

Prescribed sequences of activities or ceremonies, often with symbolic meanings, that are practiced by a community or religious group.

Language

A system of communication using symbols, sounds, or gestures that are used by members of a community to interact and convey ideas.

Social Facts

Aspects of social life that influence an individual's actions and attitudes, according to Emile Durkheim, including laws, morals, beliefs, and customs.

Empirical Observations

Information acquired by observation or experimentation that is grounded in the physical or material reality.