The Indirect Method for the Preparation of the Operating Activities

question 61

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) Separately lists each major item of operating cash receipts and payments.
• E) All of these answers are correct.

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Definitions:

Intangible Asset

Assets that are not physical in nature, including goodwill, software, and licensing agreements, valuable to a company's operations.

Lease Agreement

A contract outlining the terms under which one party agrees to rent property owned by another party.

Customer List

An asset consisting of the information about customers that a business uses for marketing, sales, and other strategic purposes.

Database

A systematic collection of data, organized so that it can easily be accessed, managed, and updated.