The SEC Requires Public Companies to Use the Indirect Method

question 35

True/False

The SEC requires public companies to use the indirect method for the statement of cash flows.

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Definitions:

Fair Market Value

An estimate of the market price of a property or asset if sold under competitive and open market conditions.

Marketable Securities

Financial instruments that can be easily converted into cash at market value, often used for short-term investments.

Current Liabilities

Obligations or debts a company is expected to pay off within a year.

Operating Cycle

The time period it takes for a company to purchase inventory, sell products, and convert sales into cash.