Which Method Will Yield Higher Cash Flows from Operating Activities

question 160

Multiple Choice

Which method will yield higher cash flows from operating activities?

• A)The indirect method.
• B)The direct method.
• C)Both direct and indirect methods will yield the same amount.
• D)Depends upon the situation.

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Definitions:

Investment Interest Expense

The amount of interest paid on debt incurred for investments, allowing taxpayers to deduct it under certain conditions.

Gross Investment Income

The total income generated from various investment sources before any deductions or taxes are applied.

Medical Expense Deduction

A tax deduction allowed for unreimbursed medical expenses that exceed a certain percentage of the taxpayer's adjusted gross income.

Dependent

Dependent is a person, typically a child or elderly family member, whose support and maintenance are provided by another, qualifying the supporting individual for certain tax benefits.