Which of the Following Statements Regarding the Direct and Indirect

question 156

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 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 from operating activities begins with profit for the year for the year as shown in the income statement.
• D) The IASB permits both the direct and the indirect methods, but has expressed a preference for the direct method.

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Definitions:

Uterine Wall

The muscular layer of the uterus, which expands during pregnancy and contracts during childbirth.

Androgens

A group of hormones that play a role in male traits and reproductive activity; testosterone is the most known androgen.

Amniotic Sac

A fluid-filled sac that surrounds and protects the embryo and fetus during pregnancy, providing a safe environment for development.

Drive-Reduction Theory

A theory of motivation that posits that humans are driven to reduce internal states of tension and return to a state of homeostasis.