Firms Have the Option of Using Either the Direct or Indirect

question 106

True/False

Firms have the option of using either the direct or indirect method to prepare the statement of cash flows.

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Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained within the company, rather than being paid out as dividends to shareholders.

Shareholders Equity

The residual interest in the assets of a company after liabilities are deducted, effectively the net worth attributable to shareholders.

Treasury Stock

Represents shares that were issued but have been bought back by the issuing company, reducing the amount of outstanding stock on the market.

Treasury Stock

Shares that were once part of the outstanding stock but were bought back by the company and are held in the company's treasury.