Which Statement Concerning the Indirect Method of Preparing a Cash

question 20

Multiple Choice

Which statement concerning the indirect method of preparing a cash flow statement is correct?

• A) With the indirect method, depreciation is deducted from profit to arrive at net cash from operating activities.
• B) The direct, rather than the indirect method of preparation, is the method preferred by standard setters.
• C) The indirect method is more expensive to implement that the direct method.
• D) The investing and financing sections of a cash flow statement differ depending on whether the direct or indirect method of preparation is used.

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