The Direct Method of Reporting Operating Cash Flows

question 12

Multiple Choice

The direct method of reporting operating cash flows:

• A)Is recommended but not required by the FASB.
• B)Must be used by all companies.
• C)Is used by most companies.
• D)Is considered supplementary disclosure.
• E)Is not recommended by the FASB,but is commonly used.

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Definitions:

Ledger

A comprehensive collection of a company's financial accounts, transactions, and balances over a period.

Structured Format

A specified and organized way of presenting or arranging information or data, typically following a predefined layout.

T-account

A graphical representation of a ledger account that is used for educating and understanding accounting.

Transaction Date

The exact date on which a financial transaction occurred or was executed.