Which of the Following Statements Is True

question 176

Multiple Choice

Which of the following statements is true?

• A) The method of preparing the operating activities section of a statement of cash flows which adjusts net income to remove the effects of deferrals and accruals for revenues and expenses is the direct method.
• B) The method of preparing the operating activities section of a statement of cash flows which reports major classes of gross cash receipts and cash payments for revenues and expenses is the indirect method.
• C) The FASB prefers the indirect method of preparing the operating activities section of the statement of cash flows.
• D) Most companies use the indirect method of preparing the operating activities section of the statement of cash flows.